Global Regulatory Insights’ Post

📢 To promote cross-boundary financial connectivity, the HKMA and the People’s Bank of China (PBoC) launched the “Three Connections, Three Facilitations” initiative this year. Specific measures, including the enhancements to the Cross-boundary Wealth Management Connect Pilot Scheme, expansion of the cross-boundary e-CNY pilot in Hong Kong, and facilitation of remittances for property purchase in the Mainland cities in the Greater Bay Area (GBA), have already been rolled out. 💱 To enhance financial market connectivity, onshore RMB bonds issued by the Ministry of Finance and Mainland policy banks are now eligible collateral for the HKMA’s RMB Liquidity Facility. The next imminent breakthrough that we are expecting is in relation to the use of onshore bonds under Northbound Bond Connect as eligible margin collateral for Northbound Swap Connect transactions. The HKMA is also working with relevant institutions to further open up the onshore repo market to institutional investors outside the Mainland. 💰 On the corporate side, the HKMA and the PBoC have set out a cooperative arrangement to facilitate two-way cross-boundary credit referencing. Through the cooperation of credit reference agencies in Shenzhen and Hong Kong, cross-boundary credit referencing pilots have enabled Hong Kong banks to access Mainland SMEs business data and credit reference information, facilitating financing worth around HK$30 million. By bridging this credit data gap, the initiative helps reduce financing costs for businesses, ultimately serving the real economy more effectively. 🏘️ For Hong Kong residents, new facilitative measures for cross-boundary remittances for property purchases in Mainland cities in the GBA have provided a safe and convenient channel for cross-boundary property purchase remittance and transactions. 🤝 On the horizon, the HKMA will soon sign a MoU with the PBoC to establish a cooperative framework on cross-boundary payment linkage between Hong Kong and the Mainland, further boosting the efficiency of cross-border payments. These initiatives mark another significant step towards closer financial cooperation between Hong Kong and the Mainland. Stay tuned for more updates on additional initiatives that we are working on! Learn more about recent developments in financial cooperation between Hong Kong and the Mainland here: https://lnkd.in/gyPXhz8d #CrossBoundary #Connectivity #PBoC #GBA 

The HKMA and PBoC are working together on the "Three Connections, Three Facilitations" initiative to achieve several goals: * **Promote cross-boundary financial connectivity:** This makes it easier for people and businesses in Hong Kong and Mainland China to do financial business with each other. This can lead to more investment, trade, and economic growth in both regions. * **Enhance financial market connectivity:** This makes it easier for banks and other financial institutions in Hong Kong and Mainland China to interact with each other. This can lead to a more stable and efficient financial system overall. * **Reduce financing costs for businesses:** By making it easier for businesses to access credit, the initiative can help them grow and create jobs. * **Provide a safe and convenient channel for cross-boundary property purchase remittance and transactions:** This makes it easier for people in Hong Kong to buy property in Mainland China. * **Boost the efficiency of cross-border payments:** This will make it faster and cheaper for people and businesses to send and receive money between Hong Kong and Mainland China. Overall, the initiative is designed to deepen financial ties between Hong Kong and Mainland China, which will benefit both economies.

China's Standardized Interest Rate Swap Market Hits ¥2.41 Trillion in Cleared Transactions China's standardized interest rate swap (IRS) market has achieved a cumulative cleared transaction volume exceeding ¥2.41 trillion, underscoring its rapid development since its launch in 2023. With 46 participating institutions spanning state-owned banks, joint-stock banks, foreign banks, securities firms, and asset managers, the market demonstrates significant progress in both scale and participant diversity. 🔎 Enhancing Risk Management with Innovative Financial Instruments Tied to the PrimeNCD3M benchmark, standardized IRS contracts serve as critical tools for managing short-term interest rate risks. These standardized derivatives enable commercial banks to lock in funding costs and mitigate asset-liability mismatches, while investment firms can enhance returns through effective risk hedging. 🔎 DBS China Leads Foreign Banks in Market Integration DBS Bank (China)'s entry as the first foreign bank into the standardized IRS market represents a landmark achievement. Leveraging its expertise in cross-border financial solutions and regional reach, DBS is facilitating greater foreign participation in China's interbank financial markets. The bank's use of IRS contracts to stabilize funding costs demonstrates the practical value of these instruments for international institutions, while its participation underscores China's commitment to financial market liberalization and international collaboration. #fund #Shanghai #ClearingHouse #DBSBank #interestrateswap #interbank

South Korea's financial regulators are convening with leaders of major financial groups next week amid political tensions following President Yoon Suk Yeol's impeachment motion. The Financial Services Commission (FSC) is coordinating the meeting with heads of major banks, though the date is yet to be confirmed. Initially set for Thursday, the meeting was delayed due to unrest after President Yoon's brief martial law declaration. Although the impeachment motion did not pass, market stability remains a concern. FSC Chairman Kim Byoung-hwan emphasizes the need for cooperation among organizations to swiftly implement stability measures, citing a "high likelihood of increased market volatility." Emergency meetings with senior officials have occurred, and Financial Supervisory Service Governor Lee Bok-hyun is coordinating discussions with local securities CEOs and insurance firms. Additional meetings are planned with bank treasury vice presidents and savings bank CEOs in the days ahead. A significant issue for the market is the depreciation of the Korean won, which fell to a two-year low of 1,440 won against the US dollar before stabilizing around 1,400 won. This decline raises risks of liquidity pressures on banks and affects financial institutions' capital ratios. The capital markets also face challenges, with foreign investors withdrawing over 1 trillion won ($702.2 million) from the Kospi, significantly impacting financial stocks. To counter these issues, the government announced unlimited liquidity support, including 10 trillion won for stock market stabilization and 40 trillion won for the bond market. Despite the political volatility, Finance Minister Choi Sang-mok is directing the economic response through emergency meetings and oversight of a task force for real-time action. He has reassured stakeholders regarding the Korean economy's stability, stressing the importance of maintaining external creditworthiness and engaging with international credit rating agencies. Choi's approach includes forming financial cooperation delegations and hosting briefings for overseas investors to enhance confidence. #AsiaRisk #Regulation #SouthKorea Get a full accounting of the security situation in Asia by subscribing to Security Asia. Subscribe now--free of charge--at Substack https://lnkd.in/gPtAUrsX https://lnkd.in/gHYhhbSg

[Bank association chief expresses regret over HK ELS misselling] Korea Federation of Banks Chair Cho Yong-byoung on Monday expressed regrets over massive losses inflicted on consumers who invested in derivatives products underlying a key Hong Kong stock market index, sold by local lenders. Earlier in the day, the country’s regulator Financial Supervisory Service advised banks and securities firms to compensate for losses incurred from their incomplete sales of equity-linked securities products tracking Hong Kong's H Index. The total loss on such products is expected to reach 5.8 trillion won if the Hang Seng index fails to recover from the current slump until the end of this year. “Regrettably, this kind of accident happened again although banks have been making various efforts for consumer protection,” Cho said during a press conference held to mark his 100th day in office. Tap below to read full story. #Banks #Banking #Association #HK #ELS #HongKong #SouthKorea https://lnkd.in/evV3jYPJ

The recent announcement of a meeting between officials from the Central Bank of Iraq and the U.S. Treasury is a significant event, highlighting the ongoing economic collaboration and financial dialogue between the two entities. This meeting is particularly important in the context of Iraq's economic recovery and its efforts to stabilize its financial landscape amid various challenges, including inflation and currency fluctuation. The engagement of both parties signals a commitment to fostering a more robust economic partnership. In light of Iraq's ongoing efforts to reform its banking sector and attract foreign investment, the collaboration with the U.S. Treasury could provide valuable insights into best practices for fiscal management and regulatory compliance. Furthermore, U.S. oversight and consultation could enhance transparency and build greater trust in Iraq's financial institutions. Meetings were held with a group of companies (Visa, Mastercard, and MoneyGram), banks (Citi Bank and JP Morgan), and international auditing firms (KPMG, E&Y, K2i, and Oliver Wyman). The Central Bank of Iraq delegation in New York announced the opening of a new phase of foreign transfer operations, with the involvement of (13) Iraqi institutions, in a key step toward increasing currency diversity and streamlining international transfers. This declaration followed an agreement on the methods for regulating these operations, which will encompass transactions in the Euro, Chinese Yuan, Indian Rupee, and Emirati Dirham. Furthermore, the delegation discussed the use of electronic payment cards and ways to organize and stimulate their use in line with Iraq's trend towards electronic payment. This came during meetings with a group of companies such as (Visa, Mastercard and MoneyGram), as the international auditing company (KPMG) presented an extensive analytical presentation of the uses of these cards, reinforced with recommendations and proposals to enhance organized use and accommodate the significant increase in citizens' use of these cards.

The federal government is considering amendments to the State Bank of Pakistan (SBP) Act, with key updates > including the appointment process for deputy governors and > the legalization of digital currency 💳 Under the new law, the State Bank of Pakistan (SBP) could issue its own digital currency as legal tender, with provisions to penalize unauthorized issuers and this feels like a breathnof fresh air 😇 Additionally, the #SBP's board would gain expanded powers, such as approving key financial reports, and procedural changes are proposed to streamline board meetings These steps mark a significant shift in Pakistan’s monetary landscape, with digital currency potentially becoming a regulated part of the #economy https://lnkd.in/dkPM5-zK #digitization #growth #investment #banking

Global Systemically Important Banks Deepen Operations in China Amid Expanding Financial Reforms In 2023, the Financial Stability Board (FSB) designated 29 banks as Global Systemically Important Banks (G-SIBs), underscoring their crucial roles in maintaining global financial stability. Notably, 24 of these banks now have substantial operations in China, marking the country's growing prominence in the global financial landscape and highlighting its commitment to economic openness. This expansion reflects China's active integration into international financial markets, creating unique opportunities for foreign institutions to deepen their presence. Broadening Market Presence and Economic Influence Among the G-SIBs, five Chinese banks—Industrial and Commercial Bank of China (ICBC), China Construction Bank, Bank of China, Agricultural Bank of China, and Bank of Communications—play integral roles domestically and globally. ICBC, one of the world's largest banks, provides services ranging from international trade financing to capital market solutions. Each of these Chinese institutions is closely connected with both national enterprises and the global financial network, reflecting China's dynamic and evolving financial sector. At the same time, foreign G-SIBs like JP Morgan Chase, HSBC, and Deutsche Bank have leveraged this openness, offering a range of diversified services, including wealth management, project financing, and investment banking, across China. JP Morgan, for instance, supports Chinese firms in raising capital and accessing international markets by leveraging its expertise in equities and bonds. Similarly, HSBC aligns with China's strategic economic priorities, providing comprehensive banking solutions that span corporate, retail, and wealth management sectors, facilitating both domestic growth and cross-border financial interactions. #bond #foreignexchange #FDI #financialstability #ICBC #GSIB #HSBC #JPMorgan

SAFE Releases Data on External Financial Assets and Liabilities of China's Banking Sector as at the End of March 2024 As at the end of March 2024, China's banking sector recorded external financial assets of USD 1507.9 billion, external liabilities of USD 1416.5 billion, and net external assets of USD 91.4 billion, including net RMB liabilities of USD 302.2 billion and net foreign currency assets of USD 393.6 billion. 📊 Among the external financial assets of the banking sector, by instrument, deposits and loans were USD 931.8 billion, bonds investment, USD 352.3 billion, and other assets including equity, USD 223.8 billion, accounting for 62 percent, 23 percent and 15 percent of the sector's total external financial assets respectively. 📊 By currency, RMB assets were USD 380.4 billion, USD assets were USD 798.4 billion, and other currency assets were USD 329.1 billion, accounting for 25 percent, 53 percent and 22 percent respectively. 📊 By counterpart sector, the amount invested in the overseas banking sector was USD 747.9 billion, accounting for 50 percent; the amount invested in the overseas non-banking sector was USD 760.0 billion, accounting for 50 percent. https://lnkd.in/g92fZAUW #loan #SAFE #data #statistics #deposits #RMB #assets

Does the Nigerian Financial Market really need the BDCs? Firstly, it's good to note that Bureau de Change (BDC) establishments exist in many countries around the world, not just in Nigeria. They are commonly found in countries with controlled or fluctuating exchange rate regimes, where they provide services related to buying and selling foreign currencies. It's also good to note that BDCs provide easier access to foreign currency for individuals and small businesses, especially in areas where traditional banking services may be limited. Contributing to the liquidity of the foreign exchange market by catering to the demand for small transactions, thereby complementing the activities of commercial banks. Notwithstanding, Bureau de Change (BDC) operators can potentially contribute to fluctuations in the value of the Naira, especially in situations where there is high demand for foreign currency ( just like we're currently experiencing) and limited regulatory oversight. Emphasis on "limited regulatory oversight" and that's the major reason the CBN on 23rd February, 2024 released a 50 pages "Revised Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria". My key Highlights from the long read are: - Categorising BDCs into Tier 1 and Tier 2 with a minimum capital requirement of N2billion and N500million respectively, amongst other financial requirements. I mean, you do not want to beef up such capital only to engage in unauthorised activities that could get your license revoked right? - About 23 Non-permissible activities was listed with engaging in street- trading being number one. - Talking about non eligible promoters, Certain entities like banks, government agencies, NGOs etc are not allowed to have ownership stake in BDCs. - Accounting and Auditing of Financial Statements : BDCs are mandated to keep appropriate books of account free from all material errors and omissions. And the external auditor shall submit a copy of the management letter to the CBN not latter than 3 months after the end of the financial year to which the financial statements relate. This action appears quite applaudable, as it is imperative to acknowledge that inadequate regulatory oversight or ineffective enforcement of regulations pertaining to Bureau de Change (BDCs) can potentially foster illicit activities, including money laundering and currency speculation. These activities have the potential to undermine the stability of the Naira." However, it's important to also note that BDCs are just one factor among many that can influence currency fluctuations. A combination of various economic and market factors collectively influences the value of the Naira in the foreign exchange market. As such, it's still more of trying to cure the symptoms and doing nothing about the cause of the illness. Let me know your thoughts on this in the comments. Cheers to a fruit week ahead. 🥂