Income Partners receives RQFII license from CSRC

Income Partners receives RQFII license from CSRC
Tue, 13/08/2013 – 16:15

Fixed income specialist Income Partners Asset Management (HK) Limited has been granted an RMB Qualified Foreign Institutional Investors (RQFII) asset management license from the China Securities Regulatory Commission (CSRC).

Income Partners has been an innovator in RMB and Asian fixed income investments. In 2010, Income Partners was one of the first asset managers to launch offshore CNH bond funds: the Income Partners Renminbi Investment Grade Fund and the Income Partners Renminbi High Yield Bond Fund.

Emil Nguy, managing partner and co-founder of Income Partners, says: “It has always been the firm’s goal to provide our clients and investors the broadest investment opportunity set, to fulfil their investment return requirements. We are delighted that the CSRC has granted us the opportunity to invest in the China onshore bond market. Our investment teams based in Beijing and Hong Kong have a strong long term track record investing in Chinese companies – this is a natural extension of the investment capabilities we can offer to our clients. Ultimately we believe the China onshore bond market will complete the Asian bond market story – the Chinese bond market is already the third largest in the world, with the current economic conditions, investors have the option of participating in the China growth story via both equities and bonds.”

Shen Tan, managing director and head of relationship management, says: “This is the reason why I joined Income Partners – this is a growing asset management company, and more importantly we are constantly innovating and investors will recognize the unique investment capabilities the firm has. We can provide investors a complete set of investment tools to access the Asian credit market, and our track record speaks for itself. We are confident we can replicate the strong performances our offshore CNH bond funds to our new RQFII bond fund.”

Data providers confident that demand from Asia will double

Demand for market data services in Asia is set to expand rapidly over the next few years, believes Frank Piasecki, the president and co-founder of ACTIV Financial Systems. ACTIV is adding ten new markets in the region to its global data feed coverage this year.

via Pocket July 31, 2013 at 07:39PM

Vietfund Management taps Deutsche Bank for custody, fund services

The Asset – Magazine-Vietfund Management taps Deutsche Bank for custody, fund services.

Chris Fix delivers on Asia promise for Dubai bourse

Chris Fix delivers on Asia promise for Dubai bourse


Chris Fix, the chief executive of the Dubai Mercantile Exchange who was tasked last year with growing the Asia-Pacific membership of the exchange, has signed up its first full trading member from Japan.

Fix delivers on Asia promise for Dubai bourse

Mitsubishi Corporation, one of Japan’s largest trading companies, became a full DME trading house member yesterday. The exchange has also held talks with companies from elsewhere in Asia, including Korea, according to one person familiar with the situation.

Fix, who became DME chief executive in August 2012, was brought in with a mandate to grow the exchange’s Asia-Pacific reach. Fix joined the exchange from French bank BNP Paribas, where he had helped build the bank’s customer base in Asia four-fold during his time there.

Ahmad Sharaf, chairman of the DME, said at the time of Fix’s appointment: “When we restructured the DME in February of this year, we signalled our intention to place more emphasis on the increasingly important Asian market. The appointment of Christopher Fix as the new DME chief executive, with the Asian market knowledge and experience he brings, is a real tangible expression of that commitment.”

The restructuring of the DME in February 2012 saw the CME Group double its stake in the exchange to 50% and the Oman Investment Fund increase its holding to 29%.


Since the restructuring, the exchange has admitted three new members: Indian holding company Reliance Industries, RBS and Mitsubishi. The DME now has a total of 31 members.

RBS was admitted as a clearing member in March, as first reported by Financial News. Reliance and Mitsubishi have both joined as trading members.

The DME has also been trying to raise the profile of its Asian oil benchmark, based on the DME Oman Crude Oil Futures Contract. Fix said yesterday: “Mitsubishi’s decision to acquire a membership is a major endorsement of DME Oman’s position as the new benchmark for crude oil trading for the Asian markets.

“With the strong support of customers like Mitsubishi, DME continues to move from strength to strength and is perfectly positioned to bridge the rapidly expanding crude oil corridor between the Middle East and Asia.”


–write to and follow on Twitter: @journosooz

The Asset – Magazine-Facilitating Growth in Asia through Shared Services

The Asset – Magazine-Facilitating Growth in Asia through Shared Services.

Hong Kong Subsidiary Opened by MIG Bank

Switzerland’s MIG Bank has opened a new brokerage subsidiary in Hong Kong, MIG Capital Asia Limited. The office will be MIG Bank’s hub as it seeks to expand in Asia and improve its broking, foreign exchange (FX) and other services for the Asian financial markets.

via Pocket June 06, 2013 at 06:48PM

Asian institutions strive to become better modellers of derivatives

The search for yield is seeing Asian institutional investors taking on more multi-asset class and pan-jurisdictional positions, while a drive for greater risk management is increasing the usage of OTC (over the counter) derivatives, and as a result many Asian institutions are upgrading th

via Pocket May 16, 2013 at 07:06PM

StanChart-Clearstream deal to support collateral needs in Asia

Asia-focused bank Standard Chartered is partnering with Clearstream to allow mutual clients to place holdings into a single collateral pool, ahead of OTC derivatives rule changes.

via Pocket April 25, 2013 at 11:59PM

What is driving co-location and proximity hosting in Asia?

Emmanuel Doe, President of Trading Solutions, Interactive Data examines narrowing structural differences between Asia-Pac and the rest of the world.

Asia Pacific is fast emerging as a hub for electronic trading globally. Despite the fragmented geographic structure of the region and a complex regulatory landscape, international traders are finding Asia-Pacific increasingly compelling as a business opportunity to help differentiate their trading strategies from other participants.

Many firms are increasingly attracted to the Asia-Pacific region because of its diversified range of markets. In terms of high frequency trading the developed markets – Australia, Japan and Korea – have evolved their infrastructure based on European and North American best practices. The developing markets, such as China, Hong Kong, India, Singapore and Taiwan, are investing in technology upgrades and are catching up with the more established markets.


However, despite the attractions of these markets, a number of operational and infrastructure challenges still remain for traders.


Regulatory Landscape

The regulatory landscape within Asia-Pacific is complex due to the lack of a single regulator driving the regional equivalent of a MiFID or RegNMS style regulation that would place multiple markets into a coherent framework, drive standardisation and potentially reduce clearing costs.


Some national regulators welcome overseas firms and competing execution venues, while others are more cautious. Transaction costs also vary and in some of the markets can be significant due to stamp duty and transaction taxes, which are charged on top of commissions and spreads.

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This is likely to change as more global firms enter these markets. Asia Pacific’s advantage is that it is still relatively immature compared to the US and Europe and so can learn from the developments within those markets and consequently adopt a more balanced approach to reform

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Geographic Spread

Given the distances between major trading venues, network latency is an extremely significant factor for electronic trading in the region. For example, the direct route between Tokyo and Hong Kong is approximately 2.5 times the route between New York and Chicago, or approximately 4.5 times the distance between London and Frankfurt. This inherent latency does have an affect on the decision on where to locate trading operations in the region and how to execute multi-venue trading strategies.

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Location also tends to be determined by the type of trading strategy employed, such as single market cross-asset, multi-market intra-region, or multi-market inter-region. Hong Kong is seen as the key venue for traders looking to access China, while Japan has strong links with Chicago and Singapore for futures trading. Singapore is fostering links with the emerging Southeast markets (Malaysia, Vietnam, Indonesia, the Philippines, and Thailand) via the Association of Southeast Asian Nations’ (ASEAN) trading link up to facilitate increased cross-border trading in the region.

Demand For Co-Location And Proximity Hosting

Co-location is nothing new in the West and the trend is now extending eastwards in order to minimise order roundtrip latency for firms executing on the various Asia Pacific exchanges.





With the increased focus on the region, there has been, in turn, greater demand from trading organisations for enhanced connectivity and co-location availability. Many of the region’s major exchanges have responded to this. According to research by GreySpark1, 61% of exchanges offer co-location services and 39% offer proximity hosting.

There has been a sustained period of technology investment in the leading markets of Australia, Hong Kong, Japan and Singapore as well as in the emerging markets that are trying to compete with the traditional liquidity centres. This investment has included trading system upgrades to boost capacity and speed, adoption of standard technology offerings from NYSE Technologies and NASDAQ, and the introduction of Direct Market Access (DMA).

These enhancements will require firms to locate hardware and applications closer to the matching engines in order to remain competitive. As competition increases, co-location and proximity hosting have grown in importance.


While an increasing number of exchanges are offering co-location facilities that boast of reduced latency, not all are comparable. Some, such as the Singapore Stock Exchange, provide transparency around their co-location design and latency measurements. Other co-location centres, generally the smaller exchanges, are not as transparent with regard to performance metrics.


Managing Total Cost Of Ownership

With Asia hosting more than 20 electronic trading venues and nearly 50 exchanges, dispersed across a wide geographic area, accessing all of the markets required to execute a strategy can be difficult.


Infrastructure is not currently mature enough to support the speed at which the market is growing, and this has prevented electronic trading on the scale seen in the US and Europe, due to the high investment required to upgrade lines to enable higher volumes. Network costs are far higher due to the greater geographic distances between venues.

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In the race to reduce latency in Asia, the cost of building software and infrastructure platforms to take advantage of liquidity on these venues can be significant. There is also the cost of ongoing maintenance and the overall total cost of ownership (TCO) to consider.



Cost is driving demand for managed services that can offer a mix of DMA, co-location and proximity. This enables firms to access specific markets in the most effective way to execute their trading strategies. This outsourced approach has the clear benefit of offering a lower TCO for multi-market and multi-asset trading.

In terms of co-location, a managed services provider can provide a faster connectivity option by allowing financial firms unobstructed access to exchange matching engines. With new routes scheduled to open and technology continuing to advance, firms that choose to outsource don’t have to worry about investing in the fastest lines between markets, or ensuring they have the latest switching and routing hardware. All of those elements can be managed on their behalf at a reduced total cost, leaving them to concentrate on strategy and client service.


There is also a growing requirement for consolidated data feeds for global markets being fed into these co-location sites. This gives trading firms the lowest possible latency for their primary trading markets alongside access to market data from a large number of regional markets, delivered to a single point.


Proximity hosting, generally delivered through data centres located near many leading exchanges, can provide microsecond-level access to an exchange presence, often at a fraction of the cost of hosting in the exchange’s proprietary co-location facility.


Time to market is another critical factor that has led more firms to examine the outsourcing of their trading infrastructure, particularly if they want to access multiple markets. With each venue having differing regulations, technology rules and upgrade plans, trying to manage all of the moving parts can be challenging.


The continuing evolution of developing markets, especially in relation to technology upgrades, and the complexity of their internal infrastructure, creates opportunities for trading firms. Technology upgrades which level the playing field for electronic trading firms are happening across the region and are in various stages of progress and refreshes.


As the markets continue to evolve so too will the demand to access new pools of liquidity and the alternative venues that will emerge as a result of new regulation. This will continue to drive demand for advanced co-location and proximity hosting solutions to ensure firms can access their desired markets quickly and cost-effectively.


1 “Low Latency in Asia-Pacific: An infrastructure overview”. Frederic Ponzo, Anna Pajor, Saoirse Kennedy, 2012

This article is provided for information purposes only.  Nothing herein should be construed as legal or other professional advice or be relied upon as such.

© Interactive Data (Europe) Ltd 2012

Asian fund managers brace for FTT, OTC regulations

The Asset Update

Asian fund managers brace for FTT, OTC regulations
17 Apr 2013 by Bayani S Cruz

Five years following the financial crisis, the financial services industry is preparing in earnest for new regulations that are intended to prevent such a crisis from happening again.

While there is consensus in the fund management industry that the regulations are necessary, their onerous nature is expected to put additional pressure on a sector that is already reeling from increasingly challenging market conditions.

The most urgent issues facing the fund management industry on the regulatory front in 2013 are the financial transaction tax (FTT) and the implementation of the regulatory regime for the over-the-counter (OTC) derivatives market.

Both regulations are unique although they have one common feature that make complying with them daunting: their extraterritorial nature. The FTT was proposed by the EU on February 14 2013. Under the proposal, a 0.1% tax on equity and debt equity transactions as well as a 0.01% charge on derivatives transactions will be imposed as early as January 2014 by 11 member states: Portugal, Spain, France, Belgium, Germany, Austria, Italy, Greece, Slovenia, Slovakia and Estonia.

Although in September 2011 the directive on the FTT was proposed to cover the 27 EU member states, it met strong opposition from the UK and Luxembourg. Under the new proposal issued last February, the 11 member states mentioned are seeking the implementation of the FTT under the principle of “enhanced cooperation” wherein some EU member states can adopt a directive that does not apply to the other member states. The FTT directive will require unanimous agreement between the FTT zone states. If an agreement is obtained, the FTT will come into force on January 2014.

Although some in the global fund management industry believe that the FTT may not be approved, others argue that the enormous tax windfall that these countries stand to gain – estimated at E30-35 billion annually – improves the chances of the FTT’s adoption.

“There are some who believe that the FTT will never come to pass, but ignore it at your peril,” warns Diana Chan, chief executive officer of the European Central Counterparty during a keynote speech at the Citi Securities Market Leadership Forum.

Extraterritorial scare

The wide extraterritorial nature of the FTT makes the prospect of its approval intimidating for the fund management industry, especially in Asia.

According to the EU proposal, the FTT will encompass not only purchases and sales of all financial instruments (including securities and derivatives) but will likely apply equally to repos, securities lending and collateral transfers.

In addition, the FTT has wide extraterritorial coverage based on the so-called resident principle, which catches all such transactions as long as one of the entities involved is a resident of any of the 11 EU states. The tax also applies to transactions undertaken by the overseas branches and subsidiaries of such entities. The transactions of, say, a French bank in Hong Kong or anywhere else in Asia would be covered by the FTT.

The FTT’s location principle captures all securities transactions undertaken by entities established in the FTT zone (the 11 EU countries) regardless of where the securities are traded. As such, transactions cleared by Euroclear Bank in Belgium could be subject to FTT even if the transacting parties and the securities are both outside the FTT zone.

Another unique feature of the FTT is that in transactions where an intermediary (or chain of intermediaries) is involved, the tax will be levied at every step of the intermediation chain.

For the fund management industry, the implementation of the FTT is expected to increase the cost of capital, raise the cost of hedging for businesses and reduce the return on its investment.

On the other hand, fund managers believe such challenges and restrictions may open up new opportunities for non-FTT markets should investors and fund managers switch their businesses to these places in a bid to avoid the FTT.

OTC derivatives

Another regulatory issue deemed burdensome by the fund management industry is the implementation of the OTC derivatives regulation.

This regulation stems from an agreement announced in September 2009 by the G-20 (Group of Twenty Finance Ministers and Central Bank governors) to prevent another crisis by making it mandatory that all OTC derivatives contracts are traded on exchanges or electronic trading platforms and cleared through central counterparties (CCPs). The agreement was based on the proven robustness and usefulness of CCPs in the wake of the collapse of Lehman Brothers; clearing could also help capture data, useful to regulators.

Under the G-20 agreement, regulators in individual countries must implement OTC regulations consistent with a common set of requirements.

One such requirement stipulates that OTC derivatives contracts must be cleared through CCPs and that non-centrally cleared contracts must be subject to higher capital requirements for banks. One of the main objectives is to provide an audit trail through electronic trading, unlike the situation prior to the crisis when there was practically no way to monitor the level of activity in OTC derivative transactions.

For their domestic OTC derivatives markets, market regulators in Asia have been enacting regulations designed to be consistent with the G-20 requirements.
According to the proposed amendment, the reporting and clearing requirements will initially be applied to interest rate swaps and non-deliverable forwards.

The Hong Kong Monetary Authority (HKMA) will set up a local trade depository for the reporting of OTC transactions within its existing central moneymarkets unit (CMU). The HKMA will ensure that the reporting standards and specifications adopted by the trade depository are in line with those set by international standard-setting bodies and major industry platforms. Reporting will be done either directly or through an agent.

On the clearing side, the new regulation will require the banks, approved money brokers, licensed corporations and other entities to clear through a designated CCP all transactions which have exceeded the specified clearing threshold. For this, the Hong Kong exchange will establish a CCP to provide central clearing services for OTC derivative transactions.

One further aspect of OTC derivatives clearing is that in anticipation of the much higher views of collateral requirements transactions, Clearstream and Euroclear Bank, the international central securities depositories (ICSDs), as well as other custodian banks, have announced stronger collateral management programmes.

Bank of New York Mellon too announced in January 2013 that it is establishing a new central securities depository (CSD) in Europe that will provide collateral management services.

Re-engineering infrastructure

Another issue raised by the fund management industry are the challenges of enforcing the principles and standards agreed in the global financial markets reforms, such as the G-20.

On the regulatory front, the fund management industry is also confronted with issues such as high frequency trading, shadow banking, complex structured products, credit agencies, financial benchmarks to replace Libor and resolutions’ regimes for banks and non-bank financial institutions.

“Large re-engineering of financial markets infrastructure is difficult because of the complexity and interconnectivity of the many parts. We can expect that most of the major problems will be on a cross-border basis because major financial institutions have multiple branches and subsidiaries all over the world. Regulators need to identify where the next big issue might occur and do what they must do to minimize its systemic risk,” according to Chan.

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