Regulatory changes
  • Bangladesh Money Market Scenario and Outlook

    Source: Md. Nazmus Sakib
    Date Submitted: 11 Jan 2018
    Views: 31
    Downloads: 12
    Money market of Bangladesh has gone through some swift changes due to the backlash on the liquidity. Liquidity drag has been mainly occurred due to the extensive private sector credit growth keeping most of the banks’ advance deposit ratio (ADR) close to 85%. At least 12 commercial banks including the public banks have exceeded the existing ADR limit. Private sector credit growth was mainly fuelled by borrowers’ appetite for cheap fund and banks’ opportunity to generate profit. As a drive to squeeze the excessive private sector credit growth, Bangladesh Bank plans to curtail limit on advance-deposit ratio which will persuade banks to seek large deposits in short time. To pursue the objective, deposit rate needs to be attractive for all sorts of potential depositors. The impact is already apparent in the interest rates of banks. According to the industry participants, interest rate has gone up by around 1% already from October, 2017. Upward pressure on USD has also led to a critical scenario for retaining strong liquidity of BDT. Import of consumer goods has surged to a massive level due to shortage of food supply. Furthermore, import of capital machineries has also gone up as construction of large development projects are on the pipeline. Unless strong interference is initiated by Government, USD may escalate further and lead to squeezed liquidity. Interest rate is supposed to go up further in 2018.
  • 金融周期下的政策选择

    Source: 施东辉博士,上海证券交易所资本市场研究所所长
    Date Submitted: 08 Jan 2018
    Views: 0
    Downloads: 0

  • The Investment Opportunity in China’s “New Era”

    Source: Vania Pang
    Date Submitted: 08 Jan 2018
    Views: 46
    Downloads: 0
    A long-term economic roadmap for China has been set at the 19th Party Congress of China for the new era.
  • Korea Corporate Governance Symposium – ARX O20 Event, Korea, Seoul

    Source: Bruce Lee, CFA, Alan Lok, CFA
    Date Submitted: 13 Dec 2017
    Views: 474
    Downloads: 10
    This Autumn, leveraging on the iconic article by Dr Bruce Lee, CFA on Korea’s corporate
    governance (CG) scene the features on ARX, entitled “Corporate Governance Revolution
    3751.html, CFA Institute in collaboration with CFA Society Korea hosted a CG panel
    discussion with Dr Bruce Lee and three other practicing experts.

    The panel discussion was a full house event with more than 80 participants from the
    local CFA community.
  • Heterogeneity in how algorithmic traders impact institutional trading costs

    Source: Joseph Barbara
    Date Submitted: 10 Dec 2017
    Views: 56
    Downloads: 0
    Technology has fundamentally transformed how trading occurs on financial markets, but not everyone agrees that it is for the better.  Few changes in how securities are traded have ever generated as much debate and disagreement as algorithmic and high-frequency trading (AT and HFT).  On one hand, many academic and regulatory studies find that AT/HFT in aggregate is beneficial (e.g., lowering spreads and improving price discovery) or at worst benign. Yet, at odds with this view, many institutional investors claim that finding liquidity for large orders has become more difficult and their trading costs in contemporary markets are worse than before the technological advancements. 
    We reconcile these conflicting views using unique regulatory data for the Australian equities market. We show that behind the aggregate effects of algorithmic and high-frequency trading (AT/HFT) lies rich heterogeneity in the effects of individual traders/algorithms.  We find that the most harmful traders double the costs of executing institutional parent orders.  Beneficial traders offset much of this increase.  HFTs are no more likely to increase institutional trading costs than non-HFTs. We identify other characteristics that distinguish harmful and beneficial traders.  The paper explains why AT/HFT appear detrimental to some investors despite being beneficial or benign in aggregate.

    The paper can be obtained here:

  • SGX Consultation Paper on Enhancements to Continuous Disclosures

    Date Submitted: 08 Dec 2017
    Views: 778
    Downloads: 0
    Singapore Exchange (SGX) has proposed to recalibrate disclosure requirements under the Listing Rules for areas of concern to both the market and the exchange.
    These changes cover the following areas:
    1. Secondary fund-raising
    ◾Additional upfront and prominent disclosure of the discount, ratio and other principal terms for rights issues.
    ◾A directors’ statement on why the rights issue is in the best interest of the issuer and their basis for forming such a view including justification for any discount.
    ◾Additional disclosure of the use of proceeds and intended use of unutilized amount if a rights issue takes place within a year of another fund-raising.
    ◾To announce specific usage of funds when disbursed if they were earmarked for “general working capital purposes” during the fund-raising exercise.
    2. Interested Person Transactions
    ◾Interested Person Transactions below S$100,000 are no longer exempted from announcements or shareholder vote.
    ◾Additional disclosure on the nature of the relationship with the interested person.
    ◾Identify the relevant director, CEO or controlling shareholder of the issuer who will be covered by the IPT mandate.
    3. Significant transactions and loans
    ◾Additional disclosures for loans that are not part of the issuer’s ordinary course of business.
    ◾Explanation on why no valuation was done for an acquisition or disposal of assets that is a major transaction except if the transaction involved shares.
    ◾Appointment of a competent and independent valuer for significant asset disposals.
    Detailed information can be found on the below official hyperlinks:
    We would appreciate if interested members could leave your comments on ARX or email me by 06th January 2018. CFA Singapore will submit a collective response to SGX if there are substantive comments. If you would like your identity to be kept confidential, please let us know in your response to us.
    Thank you.
  • MAS Consultation Paper on Execution of Customers' Orders

    Date Submitted: 06 Dec 2017
    Views: 1093
    Downloads: 0
    The Monetary Authority of Singapore (MAS) is proposing to: 
    - formalize expectations for holders of a capital markets services (CMS) licenses, banks, merchant banks and finance companies to have in place policies and procedures to place and/or execute customers’ orders on the best available terms to support fair outcomes for customers; and
    - enhance the existing business conduct requirements, applicable to CMS licensees, banks, merchant banks and finance companies, relating to handling of customers’ orders. 

    Specific Questions:
    1.    MAS seeks comments on the Best Execution requirements in the draft Notice and the draft guidelines to the Notice, set out in Annex 1 and 2.
    2.    MAS also seeks comments on the handling of comparable customers’ orders requirement set out in the draft notice. 

    Both Annex 1 and 2 are to be found on the below official hyperlink:

    We would appreciate if interested members could leave your comments on ARX or email to me by 13th December 2017. If you would like your identity to be kept confidential, please let us know in your response to us. Thank you.
  • Who Should Regulate Investment Advisers?

    Source: Dr Ben Charoenwong, Dr Alan Kwan, Dr Tarik Umar
    Date Submitted: 04 Dec 2017
    Views: 1762
    Downloads: 11
    We study the change in a jurisdiction of state and federal investment adviser regulators on investment adviser misconduct in the United States. Compared with advisers who did not experience the re-jurisdiction, we find evidence suggesting that misconduct increased after mid-sized investment advisers were required to switch from SEC to state regulation.
  • CFA Societies Australia: Submission to the Australian Investment Securities Commission on the National Financial Literacy Strategy

    Source: Susan Morey
    Date Submitted: 11 Dec 2017
    Views: 337
    Downloads: 10
    CFA Societies Australia: Submission to the Australian Investment Securities Commission on the National Financial Literacy Strategy
  • Effects of Chinese Imports on U.S. Firm Innovation: Evidence from the US-China Permanent Normal Trade Relation

    Source: Yuxi Wang, Huasheng Gao
    Date Submitted: 28 Nov 2017
    Views: 57
    Downloads: 2
    We examine the effect of United States’ conferral of Permanent Normal Trade Relations (PNTR) on China—a policy that eliminates the uncertainty of future tariff increases associated with Chinese goods— on U.S. firm innovation. We find a significant increase in the number of patents and patent citations for U.S. firms that are affected by PNTR relative to firms that are not affected. This result is stronger for industries that experience a greater increase in Chinese goods following PNTR. Overall, our evidence suggests that Chinese imports induce U.S firms to invest more in innovative technology. 
  • Asset pricing implications of your mutual fund manager's constraints

    Source: Pratish Patel, Brian Ayash, Ziemowit Bednarek
    Date Submitted: 26 Nov 2017
    Views: 35
    Downloads: 1
    By the end of 2015, U.S. mutual funds managed $15 trillion in assets. These funds control about 25% of the equity and 40% of the commercial paper market. As a result, regulations affecting these funds have asset pricing implications. In this paper, we analyze the liquidity management constraint imposed on these funds by the Investment Company Act of 1940. Due to the Act, some funds do not trade illiquid stocks. The non-tradability of these stocks leads to sub-optimal risk sharing. In a competitive equilibrium, we show that this constraint generates the ``betting against beta'' phenomenon. Moreover, because of this constraint, alpha is non-zero in general. Adding factors to eliminate alpha is therefore a futile exercise. Lastly, we empirically corroborate the theory by offering an alternate explanation of the distress risk anomaly. 
  • AFM - Order Exposure in High Frequency Markets

    Source: Bidisha Chakrabarty, Terrence Hendershott, Samarpa Nawn, Roberto Pascual
    Date Submitted: 26 Nov 2017
    Views: 25
    Downloads: 0
    Theory predicts that uninformed traders hide limit orders to avoid free-option risk while informed traders hide to delay information revelation. Evidence from non-high frequency markets supports the free-option narrative. We advance the study of order exposure to high frequency markets. Using detailed data that identify hidden order placement by high-frequency traders (HFTs) vis-à-vis other algorithmic and non-algorithmic traders, we find that HFTs use small share sizes to hide orders near the best quotes. HFTs’ hidden orders have shorter time to completion, higher fill rates, lower implementation shortfall, and overall lower information content. Collectively our results show that extant models do not explain the order exposure choice of HFTs and calls for new theory. In that direction, we test and find that compared to other trader groups, HFTs’ aggressive hidden limit orders more often undercut standing orders at or near the best quotes.
  • MAS Consultation Paper on Liquidity Risk Management for Fund Management Companies

    Date Submitted: 19 Nov 2017
    Views: 113
    Downloads: 0
    The Monetary Authority of Singapore (MAS) proposes to introduce a liquidity risk management framework in the form of guidelines for fund management companies with respect to the collective investment schemes (CIS) that they manage.  The framework seeks to provide guidance on sound practices in liquidity risk management of CIS to address the risks to investors from potential liquidity mismatches between the CIS' portfolio liquidity and redemption terms. MAS also proposes to amend the Code on CIS to impose additional portfolio requirements for money market funds due to their systemic relevance in the event of a crisis. MAS has issued a consultation paper and we would like to invite CFA members to submit their feedback for a collective response to this consultation paper.  
    Please click on the link below for the Consultation Paper on Liquidity Risk Management for Fund Management Companies: and Publications/Consultation Papers/Consultation Paper on Liquidity Risk Management Guidelines_26 Oct 2017.pdf

    We would appreciate if interested members could leave your comments by 25 November 2017. If you would like your identity to be kept confidential, please let us know in your response to us. Thank you.