The FIA Asia eMarketBeat The FIA Asia Weekly Roundup
FIA and Engage China Coalition Urge President Obama to Support Financial Market Reforms in China
Washington, D.C.—Nov. 12, 2009—Engage China, a coalition of eleven financial services trade associations based in the U.S., have urged President Barack Obama to use his upcoming trip to China as an opportunity to press for greater market-opening reforms in China’s financial services sector. The coalition, which includes the Futures Industry Association, put a particular emphasis on the importance of opening the financial sector to greater participation by foreign financial services firms. Obama will visit China from Nov. 15 to 18 as part of a tour of Asia. It will be his first visit to China since taking office.
“Our members are strongly of the view that continued reform and modernization of China’s financial sector is essential if China is to achieve its own economic goals of maintaining high rates of growth and job creation and building a more services-based, consumer-driven economy,” the coalition said in its letter. “Such reform and modernization should be based on the following core principles: (1) eliminating equity limits on ownership, permitting corporate form of choice, and removing limits on geographic expansion and restrictions on product offerings in the financial services sector, and; (2) ensuring that foreign financial sector participants and investors are treated on the same basis as domestic investors; and (3) improving regulatory and procedural transparency.”
Click Here for the Text of the Letter
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5th Annual FIA Asia Derivatives Conference
Asia
FIA is pleased to announce the fifth annual Asia-wide derivatives conference. The previous events have taken place in Beijing, Mumbai, Taipei, and Tokyo. The conference will focus on the futures and options industry in the Asia-Pacific region, featuring information exchange sessions as well as panel discussions with industry leaders from around the region.
Attendees: 400
Exhibit booths: 36
Dates: December 2-4, 2009 |
Caijin Magazine Article on Omnibus Accounts
An article, “Omnibus Accounts: Indispensable Tools,” by FIA Asia Executive Director Nick Ronalds and co-author Mark Ma of MMSoft appears in the October, 2009 issue of Caijin magazine, China’s leading magazine on finance. See the online version here:
http://magazine.caijing.com.cn/2009-10-12/110279284.html
English translation here
FIA and Engage China Coalition Congratulate New U.S. Ambassador to China, stress importance of financial modernization
Click here for the PDF
U.S.-China Economic Relations Key, U.S. Coalition Tells White House
Engage China, a coalition of nine U.S. financial services trade associations, in a Feb. 19 letter to President Barack Obama highlighted the importance of U.S. –China economist relations and urged continued work toward achieving U.S. –China Strategic Economic Dialogue. “The ongoing financial crisis and the global economic downturn have only further highlighted the degree to which the U.S. and Chinese economies are interconnected,” wrote the group. FIA is a member of the Engage China coalition and joins with the other groups in the belief that while current global economic circumstances may complicate the U.S-China relationship, they offer a unique opportunity for the U.S. and China to build a more balanced, durable and mutually beneficial relationship.
Please click here to download the Engage China Coalition Letter
FIA Japan, FIA Asia's Japanese affiliate, issues "Urgent Action" report to Japanese authorities
Over the past several years, FIA-Japan has aggressively pushed the commodities industry to develop an adequate clearinghouse function in Japan. In this regard, last year we issued three reports describing the improvements and functional requirements for the clearinghouse. Those reports were sent to the Regulators and other interested parties, and we held discussions with METI about this issue.
Last month, METI asked FIA-Japan to issue a report with our recommendation of an "Action Plan" for dealing with this important issue. On February 9, 2009, we issued our report titled "Report on Commodity Clearinghouse: Urgent Action". This report was delivered to METI and MAFF and JCCH. Some of the key points of particular interest that we included in our report are as follows:
In the commodity industry, TOCOM is the only institution with an adequate capital base and structure to support the development of a clearing function meeting global requirements. Therefore, the clearinghouse should be established within and by Tocom.
A Working Party should be created to take action and to direct the development of the Clearinghouse.
Outside experts and/or a global clearinghouse should be invited to provide consultation to the Working Party.
The Japan financial / securities exchanges should be invited to work with and support this effort. The existing "silos" between commodities and financial markets should be crossed over and eventually "dissolved." Common clearing among all exchanges should be explored.
It is our plan to continue the activities of the FIA-J Clearinghouse Task Force and to hold further discussions with TOCOM and other leaders and interested parties to encourage the actions we have recommended. We believe this initiative is essential for the success of the commodities industry in Japan.
Please contact our Executive Secretary, Ms. Motoko Ogawa, if you would like an additional copy.
Regards,
Mitch Fulscher
Chairman, FIA-Japan
Please click here to download the full report
FIA Asia Annual Meeting Dec. 22
FIA Asia will hold its annual meeting for the election of directors and other business on Dec. 22 at 9 a.m. at the FIA Asia offices. At this meeting three director are to be elected for a one-year term.
For More Details
FIA Meets with Chinese Officials to Discuss Financial Sector Reform
Nick Ronalds, the executive director of FIA Asia, travelled to China on Nov. 17-21 as part of a delegation of financial industry representatives to encourage Chinese officials in Beijing and Shanghai to continue their reform of the financial sector. The trip was organized by the Engage China coalition, which includes representatives from U.S. banking, securities, insurance and fund management associations.
The group met with officials including Zhang Xin, director-general, financial stability bureau, People’s Bank of China; Tong Daochi, director-general, international affairs, China Securities Regulatory Commission; Jesse Wang, vice president and chief research officer, China Investment Corporation; James Liu, executive vice president, Shanghai Stock Exchange, and Tu Guangshao, deputy mayor, Shanghai. The group also met with economic staff at the U.S. embassy as well as the economic attaches from the U.K., European Union, and Canada.
The group observed that China is closely monitoring the ongoing crisis in global capital markets and is deeply concerned about the impact of the crisis on the rate of China’s economic growth and job creation. Chinese officials were greatly surprised by the scale and seriousness of the financial crisis in the United States and expressed concern about the deficiencies in risk management and internal controls. The officials insisted that China remains committed to financial sector reform and modernization, including greater foreign participation, although they asserted the need to be “very careful” given the global financial turmoil. Officials stressed the importance of financial and economic stability, and the importance of sound regulation for ensuring that stability.
Futures came up several times in the context that they are increasingly being seen as “part of the solution.” That is, in the U.S. and Europe, the opacity of over-the-counter derivatives has been identified as a contributing factor to the credit crisis. In contrast, futures markets have been functioning well and indeed have played a crucial role at a time that other markets have been at near-standstill. Nevertheless, it appears that the fledgling China Financial Futures Exchange is facing stiffer headwinds because of the financial crisis. Chinese authorities are concerned about any factors that could increase volatility and uncertainty in markets and have not yet been convinced that stock index futures are likely to be a positive influence.
FIA Joins Coalition Urging President-Elect Obama to Continue China Dialogue
The FIA has joined with a coalition of U.S. financial services trade associations in urging President-Elect Barack Obama to continue the framework of regular communication with senior Chinese officials that has been established by the Bush administration. In a letter sent to Obama on Nov. 6, 2008, the coalition asked him to show his support for the continuation of this policy by sending a senior advisor to participate with Treasury Secretary Paulson at the fifth round of the Strategic Economic Dialogue on Dec. 4-5 in Beijing. The letter was sent by the Engage China coalition, which includes in addition to the FIA the American Bankers Association, American Council of Life Insurers, American Insurance Association, Bankers Association for Foreign Trade, Council of Insurance Agents and Brokers, Financial Services Forum, Financial Services Roundtable, Investment Company Institute and Securities Industry and Financial Markets Association.
To view the PDF version of the letter to President-Elect Obama click here
FIA Urges Indian Government to Drop Proposed Tax on Commodity Futures Transactions
WASHINGTON, D.C.-April 23, 2008-The Futures Industry Association today released the text of a letter sent to the Indian government that expressed strong opposition to the recently proposed transaction tax on commodity futures. The letter was sent to Prime Minister Manmohan Singh, Minister of Finance P. Chidambaram, Minister of Agriculture Sharad Pawar and other senior government officials as well as key members of Parliament. In the letter, FIA President John Damgard described the "negative consequences" that typically flow from such proposed taxes, and warned that the proposed tax could result in driving trading volume to foreign exchanges and hampering the future growth of India's commodity futures exchanges.
"India's young but vibrant commodity futures exchanges have earned the respect of the futures industry worldwide," Damgard said. "I encourage the Indian government to avoid an unnecessary tax burden and permit these markets to continue to flourish."
"In recent years, India's commodity futures markets have grown spectacularly, but they are still far too nascent to be burdened by a tax that would increase transaction costs by 800%," Damgard added. "We have seen from past experience in Japan, Taiwan and the U.S. that such proposals drive business offshore and ultimately result in lower tax revenues and a loss of international competitiveness."
The FIA is the leading trade organization for the international futures industry. It is based in Washington, D.C., and its membership includes the world's largest futures brokers as well as leading derivatives exchanges from more than 20 countries. For more information, please contact Will Acworth (wacworth@futuresindustry.org) at (202) 466-5460.
Click here for full text of FIA India Transaction Tax Letter
The FIA is the leading trade organization for the international futures industry. It is based in Washington, D.C., and its membership includes the world’s largest futures brokers as well as leading derivatives exchanges from more than 20 countries. For more information, please contact Will Acworth (wacworth@futuresindustry.org) at (202) 466-5460.
FIA Publishes Survey of DMA Risk Management Practices
On Dec. 3, 2007, the Futures Industry Association published a six-page “profile” on the practices used by exchanges and futures commission merchants to monitor and manage the risks of clients that access exchanges directly. The paper summarized the practices in place at six exchanges: the Chicago Board of Trade, the Chicago Mercantile Exchange, Eurex, IntercontinentalExchange, Liffe and the New York Mercantile Exchange.
The paper also reviewed risk management practices in use among futures commission merchants, such as establishing access to the client’s own pre-trade risk controls and automating post-trade risk calculations. The FIA initiated the project in response to the growth of a type of direct market access that is significantly different, from a risk perspective, than traditional types of order routing access. In order to reduce latency and to have more control over their trading environment, a number of market-making firms, financial institutions, and funds wish to electronically access futures exchanges directly without passing through an FCM’s infrastructure. This makes traditional forms of pre-trade risk management less effective, and in response the industry has developed various methods for monitoring this type of trading activity and managing the associated risks.
For additional information about this type of direct market access and the associated risk management issues, see the following articles in Futures Industry:
Pure Direct Market Access on the Rise
By Stephane DiTullio
http://www.fiaasia.org/fi-magazine-home.asp?a=1080
Fast and Furious: Risk Management in a DMA Environment
By Nina Mehta
http://www.fiaasia.org/fi-magazine-home.asp?a=1138
Clearing the Deck: CME Introduces “Drop Copy” Functionality
By Sarah Rudolph
http://www.fiaasia.org/fi-magazine-home.asp?a=1203
Engage China Coalition Supports Strategic Economic Dialogue
Washington, D.C. - Dec. 11, 2007 - Engage China, a coalition of nine U.S. financial services trade associations, today released a statement strongly supporting the goals of the U.S.-China Strategic Economic Dialogue, which will hold its third meeting in Beijing on Dec. 12 and 13. The FIA is a member of the Engage China coalition and joins with the other groups in believing that continued engagement with China is the best way to remove the barriers that our members face when seeking to do business in China.
Download full article
China (Shenzhen) International Derivatives Forum (CIDF)
December 3-4, 2007
Shenzhen Wuzhou Guest House
Shenzhen, China
FIA will host the 2007 China (Shenzhen) International Derivatives Forum(CIDF), along with the China Futures Association, Shenzhen Stock Exchange, and the People's Government of Shenzhen Municipality. The event will provide an important platform for communication and exchanging information within global derivatives industry, and meanwhile building relationships and creating valuable networking opportunities. The CIDF is also a good place to learn about the latest Chinese policies and regulations in the financial industry.
FIA Asia Announcement
The FIA is pleased to announce that Nick Ronalds, who has had a broad range of experience in the futures industry including many years in Asia, has agreed to serve as the senior advisor to FIA Asia. In this capacity he will work with the members of the FIA Asia Formation Committee to achieve its objectives of creating an effective presence in the Asia-Pacific region. He will oversee FIA Asia's services to its members, including publications, educational services and other projects, and work toward timely opening of an Asian office.
Nick was until recently Director of Marketing at UBS Securities and prior to that spent 10 years as global marketing manager for ABN Amro's futures division. In addition to overseeing the development and delivery of marketing initiatives to a wide range of clients, he specialized in advising institutional users of exchange-traded derivatives on effective strategies for trading and risk management. Before ABN Amro, he was a managing director of the joint CME/CBOT Asia office, where he marketed futures and options throughout Asia for seven years.
Nick has also written numerous articles for the Wall Street Journal, Futures Industry, Futures Magazine, International Financing Review, and the Journal of International Financial Markets. He has also co-authored a chapter on Chinese commodity markets in the book Intelligent Commodity Investing, published this past spring by RiskBooks.
Nick also has taken an active role in promoting better public understanding of futures and options in other venues. He was president of the CFA Society of Chicago from 2004 to 2005, and has been an adjunct professor of finance at the Illinois Institute of Technology. He is a CFA charter holder and also holds a Financial Risk Manager (FRM) designation.
Foo-Shiung Ho, who headed the organization since its formation in 2005, recently joined a brokerage firm in Taiwan as a senior executive. We wish him the best in his new endeavor.
