AsianInvestor's regulatory roundup, August 26

China: FSB calls for better regulatory coordination
The Financial Stability Board has urged China to develop better information-sharing processes between the authorities in order to coordinate the country’s financial system.

“Enhancing inter-agency coordination and developing an integrated risk assessment framework will promote a common understanding of objectives and risks, which will in turn facilitate joint policy actions and public communication,” said the report, which was published on August 13.

The report, conducted through peer review, looked into the operations of the People’s Bank of China and financial sector regulatory agencies (China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission), and found that there needed to be greater clarification of agencies’ mandates and roles in assessing systemic risks and designing policies.

An integrated systemic risk assessment framework incorporating the views of different agencies should also be further developed, the paper noted.

However, the FSB noted some of China’s achievements, such as setting out monitoring frameworks and toolkits by each agency to assess systemic risk in the sectors under their respective mandates. Data improvements and ongoing work to develop a shared statistical platform and an enhanced inter-agency coordination through the Financial Crisis Response Group directly under the State Council and the Financial Regulatory Coordination Joint Ministerial Committee were also welcomed.

China/Hong Kong: Further deregulation for financial firms
Hong Kong and Macanese financial firms are to be given permission to set up fully-licensed joint venture securities firms in Shanghai, Shenzhen and wider Guangdong in the latest round of financial deregulation.

The notice, which was announced by the China Securities Regulatory Commission last Friday (August 21) forms part of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) and further opens up the mainland securities industry.

Under the new measures, Hong Kong- and Macau-based financial groups can have a maximum aggregate shareholding of 51% in their joint ventures with mainland partners, which may not necessarily be a securities company.

Japan: Council established to review stewardship code adoption
Japan’s Financial Services Agency has set up a council to monitor progress of the adoption of the stewardship and corporate governance codes aimed at improving the investment climate.

Announced on August 7, the “Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code” will analyse the adoption of the codes by listed companies and investors.

“Further improvements of corporate governance, e.g., making governance function not only formally, but also effectively, continue to be a major agenda, and we need to link such efforts to the establishment of a virtuous economic cycle,” the FSA said in a statement.

The Council will be composed of outside experts, including members from corporate managers, local and foreign investors, and academics, with the member list to be released later.

The general affairs of the Council will be jointly handled by the Planning and Coordination Bureau’s corporate accounting and disclosure division, the Financial Services Agency and the listing department of the Tokyo Stock Exchange.

Hong Kong: SFC recovers $23 million from inside trader
A total of $23 million has been recovered for investors who lost money to convicted inside trader Du Jun, a former managing director at Morgan Stanley Asia. Hong Kong’s Securities and Futures Commission (SFC) made the announcement on August 18.

Between February 15 and April 30, 2007, Du was found to have bought several million shares in Citic Resources from 300 investors. At the time Du held confidential information concerning the shares.

The SFC said the payout was to make inside traders financially accountable to those with whom they trade and to restore those counterparties to the same position, in financial terms, they were in before the insider dealing.

Hong Kong: Regulator reappoints executives
The Securities and Futures Commission, Hong Kong’s financial watchdog, has re-appointed Brian Ho and Keith Lui as executive directors for another three-year term effective from August 28, 2015.

Ho and Lui are currently executive directors in the SFC’s corporate finance division and supervision of markets division respectively, and were first appointed to their current positions in 2006.