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ASX information paper: Capital Raising in Australia
January 29, 2010--ASX released an information paper today on capital raising in Australia and some other major markets during the global financial crisis.
It provides a description of the framework for capital raising in Australia, the methods used by companies, and how they employed these tools through the crisis. It examines some of the criticisms that have been levelled at particular equity capital raising mechanisms. The paper draws the following conclusions:
• The board of directors (given their legal obligations to act in the best interest of the company as a whole) is the appropriate body to decide which capital raising mechanism to adopt in particular circumstances.
• The range of considerations to ensure that the decision is in the interests of the company as a whole include: the size and urgency of the funding required, the market conditions at the time of the raising, the overall cost of capital associated with the option chosen, the costs and availability of alternate sources of funding, the availability of underwriting support, and the interests of all existing and potential shareholders.
• The flexibility of Australia’s capital raising arrangements served Australia’s real economy well during the GFC. It enabled companies, particularly in the finance sector, to replace debt financing and shore up balance sheets at a time of volatility and financing uncertainty, when many global banks required government capital injections.
• During the worst of the GFC, companies placed a heavier weighting on speed and certainty in their choice of capital raising, making greater use of placements to access capital in a short time period to minimise the market risks associated with a capital raising at a time when retail investor risk appetite was sharply reduced.
• As market conditions stabilised, the weighting they applied to ‘fairness’ to all shareholders increased and the relative attractiveness of pro-rata issues rose, particularly accelerated rights offers. These enabled companies to access the majority of capital from institutional investors in a short time horizon, while also providing retail investors with the opportunity to participate in the offering on similar terms, but with a longer time period to consider their position.
• Companies should, where possible, seek to minimise the dilution of existing retail shareholders. Some companies have sought to address such issues in recent times by offering a share purchase plan alternative to retail investors.
view the Capital Raising in Australia:
Experiences and Lessons from
the Global Financial Crisis
Public Consultation on the Designation of the International Financial Reporting Standards for their Voluntary Application in Japan
January 29, 2010--The Financial Services Agency (FSA) made available today an English translation of the draft of revised Regulatory Notices, etc. which intended to update the list of designated IFRSs for the voluntary application of IFRSs in Japan, in order to facilitate the public consultation process on this issue started on January 20, 2010
On December 11, 2009, the FSA published a set of revised Cabinet Office Ordinances for the voluntary application of IFRS in Japan. With this revision, Japanese listed companies which meet certain requirements (“Specified Companies”) will be given the option to prepare their consolidated financial statements, starting from the consolidated fiscal years ending on or after March 31, 2010, by applying IFRSs designated by the Commissioner of the FSA through public notice.
http://www.fsa.go.jp/en/news/2009/20091211-8.html
(Note) The Commissioner of the FSA will designate and publish in the Official Gazette, those IFRSs published by the International Accounting Standards Board (IASB) which are recognized as having been approved and issued through fair and reasonable due process and are expected to be considered as being fair and appropriate financial reporting standards from the viewpoint of investor protection and market integrity in Japan (“Designated IFRSs”). On December 11, 2009, the Commissioner of the FSA designated the entire IFRSs and International Financial Reporting Interpretations Committee (IFRIC) interpretations approved and issued by the IASB, on or before June 30, 2009
MAS Issues Consultation Paper on Regulatory Regime for Listed and Unlisted Investment Products
January 28, 2010--MAS is consulting the public on a revised package of proposals to enhance safeguards for retail customers for a wider range of investment products.
2. On 12 March 2009, MAS issued a consultation paper on the sale and marketing of unlisted investment products. MAS carefully reviewed and considered feedback received on the consultation paper and published our responses to the feedback in two parts. The first part of our response was published on 8 September 2009 and we published the second part of our response today.
3. In the March 2009 consultation paper, MAS had indicated our intention to consider whether enhancements would also be required for listed investment products. After careful consideration, MAS has decided to issue revised proposals aimed at enhancing the safeguards for retail customers covering a wider range of investment products. They will apply to both listed and unlisted investment products.
4. Under the revised proposals, MAS will impose a new obligation on financial advisers and brokers to formally assess a retail customer's investment knowledge or experience before selling investment products to the customer. Customers who do not have the relevant knowledge or experience in specific unlisted investment products must be given financial advice before being able to purchase the product. In the case of listed investment products, additional safeguards will be required when brokers approve trading accounts for customers who are assessed not to possess the relevant knowledge or experience in derivatives. These new obligations will apply for all investment products other than a list of products which are already established in the market and generally understandable by retail investors. MAS will prescribe the list of products that will be excluded from the new obligations.
5. Additional proposals include:
(i) Expanding the scope of the CMFAS examination module that was planned for the three classes of unlisted "complex investment products" consulted in March 2009 to cover other non-excluded investment products; and (ii) Requiring issuers of debentures which are asset-backed securities and structured notes, collective investment schemes and sub-funds of investment-linked life insurance policies to prepare Product Highlights Sheets.
6. In developing this revised package of proposals, MAS has considered the views and comments from the public, investors, market practitioners and industry associations.
7. Most of the proposals will require legislative amendments. Subject to feedback received from this consultation, MAS will encourage financial institutions intending to sell investment products before legislative implementation of the proposals to adopt the proposed safeguards as good practice in conducting business with retail customers.
8. MAS invites interested parties to give their views and comments on the proposals contained in the Consultation Paper. (Click here to view the consultation paper) The consultation period will end on 12 March 2010.
MAS Issues Second Part of Response to Feedback on Proposals to Strengthen the Regulation of the Sale and Marketing of Unlisted Investment Products
January 28, 2010--MAS has issued the second part of its response to the feedback on the proposals in the Consultation Paper on the Review of the Regulatory Regime Governing the Sale and Marketing of Unlisted Investment Products, which was published on 12 March 2009.
2. The first part of MAS' response was published on 8 September 2009. MAS has received supportive and useful feedback from consumers and the industry, and thanks all respondents for their comments and feedback.
3. The second part of MAS' response addresses feedback on the following proposals:
(i) introducing a definition of "complex investment products", risk rating of retail investment products, mandatory advice for the sale of complex investment products, and “health warnings” for complex investment products; (ii) remuneration structures for the sale of investment products; (iii) appointing an approved trustee for unlisted debentures; and (iv) strengthening MAS' powers to investigate and take regulatory actions.
4. In place of the complex investment products regime, MAS has developed a revised package of proposals that will apply to both listed and unlisted investment products. MAS will be conducting a separate consultation on the revised proposals.
5. Please click here to view the second part of MAS' response to the feedback received
Swap Facility with US Federal Reserve
January 28, 2010--The Monetary Authority of Singapore (MAS) said today that the temporary reciprocal currency arrangement (swap line) that was established with the US Federal Reserve on 30 October 2008 will expire on 1 February 2010, as previously announced.
2. MAS joined global central banks in establishing a temporary reciprocal currency arrangement (swap line) of US$30 billion with the US Federal Reserve in October 2008. The swap facilities allowed the Federal Reserve to provide US dollar liquidity to financial institutions through central banks in sound, well-managed and systemically important financial centres to help to improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining US dollar funding that had arisen as a result of the global financial crisis. This helped to enhance the robustness of the US dollar funding and foreign exchange markets in Singapore by reinforcing confidence among global financial institutions. MAS did not have to draw on the facility.
3. Over the past year, wholesale funding market conditions improved globally and in Singapore. The swap lines, which were established to relieve pressures in global funding markets, are no longer needed. They will therefore be allowed to expire on 1 February 2010 for the central banks with such arrangements.
C-COM Starts Joint Studies with OSE for Development of New Products
January 28, 2010--The Central Japan Commodity Exchange (C-COM) and the Osaka Securities Exchange Co, Ltd. (OSE) have agreed to start joint studies for the development of new products to be listed on the C-COM markets.
Through this collaboration, C-COM is to accelerate feasibility studies for the development of new products which further enhance the conveniences of the C-COM market for the market participants.
These joint studies are made as a specific project under the Memorandum of Understanding (MOU) entered into on May 27, 2008 among C-COM, OSE and Kansai Commodity Exchange.
India banking reforms focus on Islamic finance
January 28, 2010--India is planning to overhaul regulation of its financial system to attract investments from the Gulf and to encourage its largely unbanked Muslim population to save money in a way compliant with their religion, a senior government adviser said on Thursday.
K Rahman Khan, deputy chairman of India’s upper house of parliament, told the Financial Times that the ruling Congress party has proposed the introduction of Islamic financial products. The party was seeking regulatory approval for a move to capture one of the fastest growing sectors in the financial services industry by the finance ministry, the Reserve Bank of India and Securities and Exchange Board of India, he said.
DB Index Research -- Weekly ETF Reports -- Asia-Pacific
January 27, 2010--Highlights
Market Overview
There are 201 equity based ETFs in the Asia Pacific region with 266 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 40.60% of the whole market, whilst China has the largest market share by turnover with 48.86%.
There was one new listing in the last week. Kotak Mahindra Asset Management listed one new ETF in National Stock Exchange.
Turnover
Monthly average daily turnover rose 8.4% in the last week. Turnover for the previous week was USD 1003m. The largest ETF by turnover was the China 50 ETF issued by China Asset Management with USD 307m accounting for 30.6% of total turnover.
Assets Under Management
AUM declined 4.8% in the previous week. AUM as of Jan 25th were USD 60.8bn. The largest ETF by AUM is the TOPIX ETF managed by Nomura Asset Management with AUM of USD 6.1bn.
