Financial Services Focus Group Quarterly Update - Q4 2014

Published on 2015-02-03

The FSFG held its quarterly committee meeting on 16 December at Il Nascondiglio where we reviewed Q4 events and sketched out our programme for 2015.

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The FSFG held its quarterly committee meeting on 16 December, 2014 at Il Nascondiglio where we reviewed Q4 events and sketched out our programme for 2015.

On 14 October, 2014, we hosted a lunch for the City of London Lord Mayor. The event was well-attended and it was the first time that Shanghai Federation of Industry & Commerce attended a British Chamber event. On November 11th the Standard Chartered economist Li Wei presented a 2015 China Economic Outlook: Growth and Reform and finally on 27th November we inaugurated the M&A Club – a Social Mixer for Mergers & Acquisitions Professionals co hosted by COI FG, Legal FG and FSFG.

On 2 March, 2015, the FSFG will hold a joint meeting with the FTZ focus group to discuss a joint event on the FTZ looking at ways in which financial services firms can benefit from a presence in the FTZ and on 17th March we shall hold our first formal meeting for 2015 – this meeting will be an open meeting format – meaning that any member interested in the work of the FSFG may attend and listen to our discussion. Whilst the attendees will not be able to vote they will have the opportunity to present ideas and promote topics of interest for us to cover during the year!

Coming up we have an event to explain BITCOIN and another event focusing on the SME sector (together with the SME focus group) discussing the ways in which SMEs can raise finance in China to expand their business. In April we plan to hold an event focusing on the important changes to pensions presented by St James Place and in May we shall have the HSBC senior economist to present his view on the outlook of the china economy for the rest of the year and into 2016.

There have been some significant developments in laws and regulations related to finance and insurance during last three months of 2014 and some of these are summarised below:

On 27 November, 2014, the State Council revised the Administrative Regulations on Foreign-invested Banks (the “Regulations”), which took effect on 1 January 2015. The new Regulations relax the access conditions for foreign banks. Under the new rules, a branch established by a wholly foreign-owned bank or by a Sino-foreign joint venture bank in the territory of the People's Republic of China shall be unconditionally allocated operating funds in RMB or in other freely-convertible currencies from its head office. The sum of operating funds allocated by a wholly foreign-owned bank or a Sino-foreign joint venture bank to its branch offices shall not exceed 60% of the total capital of the head office. The new Regulations also relax the requirements for foreign banks’ application to carry out RMB business. Foreign banks will be able to apply for such business if they have operated in China for at least a year, down from a previous requirement of three years, and also face no profitability requirement, a change from the profit-making for two consecutive years in the past, and if a foreign bank has one branch that has been approved to carry out RMB business, the other branches it establishes in China will no longer face business opening restrictions when launching RMB business.

On 5 November, 2014, the Securities Association of China (“SAC”) issued the Pilot Measures for Privately-Raised Bonds for Merger, Acquisition and Reorganisation (the “Measures”), which took effect on the date of promulgation. The Measures regulate experimental private placements of bonds in terms of conditions of issue, use of raised funds, bonds’ coupon rate, filing documents and exemptions, means of issue and transfer, underwriters, investor suitability management, protection of rights of bondholders and risk control, information disclosure, etc. The Measures state that, after the issue or transfer of private placement bonds issued for mergers and acquisitions and reorganisations via the quotation system, the upper limit of qualified investors holding the bonds of the same term is 200. Pursuant to the Measures, there are no restrictions on the size of the issuer and bond maturity for private placement bonds issued for mergers and acquisitions and reorganisations, but the coupon rate of private placement bonds should not exceed four times the benchmark interest rate of banks for the same term and QFII and RQFII are qualified investors of bonds for merger, acquisition and reorganisation.

On 29 October, 2014, the China Securities Regulatory Commission (“CSRC”) released the Measures for the Supervision and Administration of Futures Companies (the “Measures”) with immediate effect. There are provisions on a foreign shareholder of a futures company.

On 20 October, 2014, the Securities Association of China (“SAC”) released the Measures for the Pilot Programme of Short-term Corporate Bonds of Securities Companies (the “Measures”) with immediate effect. The Measures shall be applicable to the issuance and transfer of short-term bonds of securities companies in their quotation systems. QFII and RQFII are qualified investors of the short-term corporate bonds of securities companies.

Other news:

China will continue to focus on reforms and the opening of the capital market, implementing prudent monetary policy and focusing on "mild adjustment and fine-tuning" to ensure the monetary policy is effective to support the country's economic growth.

RMB internationalisation continues to gather pace with the RMB joining the top five payment currencies according to SWIFT (overtaking the Canadian dollar and the Australian dollar).

The management of foreign investment will become more flexible under the new investment law, and the final version of the law will focus on equal treatment of foreign and domestic investments to eliminate terms such as "foreign-invested enterprises".

We look forward to seeing members at our open meeting on 17 March!

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