SECURITIES SERVICES REGULATION
should be reflected as a liability on its balance sheet. Regarding investor protection,
Thailand’s Securities and Exchange Commission refined its regulation on ‘digital assets’ custody, reflecting a strong focus on client asset segregation and proper authorisation prior to transfer of fiat currencies. Australia and Singapore also published investor protection guidelines. For example, the Australian Securities and Investments Commission now requires social media influencers to be appropriately licensed before giving financial advice, and Singapore’s MAS has discouraged cryptocurrency trading by the public.
Asia
During the pandemic, Asia Pacific securities regulators focused on ensuring industry operational resilience, facilitating global investors’ market access and repatriation via electronic means of administration and processes. This has been successful. And, with Covid-19 gradually treated more as an endemic, the building of Asia Pacific securities market infrastructure, and market access and repatriation, is gaining momentum again.
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Market liberalisation Securities market liberalisation is happening across Asia. South Korea requested to be included on the MSCI’s developed market classification status watchlist. As part of this request, South Korean authorities have committed to improving the KRW FX market, moving to electronic infrastructure for greater efficiencies and reviewing related areas, like the Investment Registration Certificate scheme, to facilitate foreign investors’ access. In a securities infrastructure modernisation
statement of client financial instruments and electronic client reporting. In November 2021, the European Commission published two proposals for the review of MiFID/ MiFIR. The proposals will be subject to ordinary legislative procedure, with the final text expected between the end of 2022 and mid-2023. The European Commission focused on three priority areas:
1. Improving the transparency and availability of market data
2.Improving the level playing field between execution venues 3. Ensuring EU market infrastructures remain competitive internationally
Refits on the horizon The bank also expects revisions, or ‘refits’, to the Settlement Finality Directive (SFD), Financial Collateral Directive (FCD), Central Securities Depositary Regulation (CSDR), and potentially to the Undertakings in Collective Investment in Transferable Securities V (UCITS V).
drive and as part of its New Law of Securities, enacted in January 2021, Vietnam is implementing a new securities central counterparty (CCP) model to be established as Vietnam Securities Depository & Clearing Corporation (VSDCC). This change will encompass major revisions to registration, depository, clearing and settlement of securities transactions. New industry workflows are expected to be finalised by VSDCC, with a targeted live date of the end of 2023. The industry is working with the State Securities Commission and VSDCC to address asset safety and operational areas among others. In April 2022, the People’s Bank of China issued a draft Financial Stability Law to improve financial risk management, enhancing market stability, risk resolution and clarifying the responsibilities in coordinating national financial stability and development. This law will represent a significant modernisation of the recovery and resolution regime in China’s growing capital market. China’s authorities also voted to adopt the PRC Futures and Derivatives Law to regulate the trading, clearing and settlement of futures and derivatives at the national level. Effective from August
2022, it is expected to contribute to a better operated and more open capital market. Furthermore, China unveiled a national pension reform, with a voluntary private pension scheme, that allows individuals to invest their pension into, for example, bank wealth management products that meet regulatory standards. While details are still to be outlined, these pension reforms can increase institutional investment flows and deepen China’s capital market. In India, the Securities and Exchange Board of India (SEBI) launched a new Business Responsibility and Sustainability report for the top 1,000 listed entities, introducing the mandatory disclosure of ESG-related information and improving transparency in the market. The introduction of electronic gold receipts through the framework for gold exchanges, and the Vault Managers Regulations 2021, also indicates efforts to modernise. The framework for ‘Accredited Investors’ (AIs) has been approved by SEBI, allowing more investment flexibility by well-informed investors, further encouraging India’s market to open up. In the Philippines, tax reform continues
with ‘Revenue Memorandum Circular 20–2022’, issued in February 2022 to guide the filing of Request of Confirmation, Tax Treaty Relief Application and Tax Sparring applications. It clarified and eased the documentary requirements of Non-Resident Foreign Investors/Corporations who have already been issued with a Certificate of Entitlement by the Bureau of Internal Revenue. Overall, the Philippines is improving on the ease of market entry and repatriation for cross-border investors.
Market transparency Efforts have also been made to improve market transparency. In Malaysia, under Malaysia Bursa’s Reclassification of Investor Segment project, a client needs to provide the business registration number of corporate underlying clients that open segregated securities accounts. Deutsche Bank, together with other foreign custodian banks, asked Bursa to accept Legal Entity Identifier (LEI) and the proposal was accepted. This will facilitate more efficient compliance by reusing accepted and already available identifiers.
Boon-Hiong Chan (Asia) and Britta Woernle (Europe) lead the Securities Market & Technology Advocacy team at Deutsche Bank’s Securities Services
Visit us at
flow.db.com
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