V.2_as at 12 July 2013
Not Final (For ABMF-J)
Progress and Issues in
AMBIF Discussion
Prof. Shigehito Inukai
with Matthias Schmidt
ADB Consultants
13th ABMF Meeting, Tokyo, 25 July 2013
1
Proposed Agenda
①
②
③
④
⑤
⑥
⑦
⑧
⑨
Support for Interim Report from AFMCGM
Additional Information since Interim Report
Addressing Regulatory Concerns
Detailing AMBIF Components
Documentation - Creation of Voluntary ADRB
Update on Information Platform
Proposed Phase 3 Activities
Introduction of ADRB (Voluntary working group for
making recommendations on AMBIF Documentation)
Questions & Answers (in Session 2)
2
① Support for Interim Report from
AFMCGM
3
AMBIF Focus is shifting
•
•
•
•
•
Basic AMBIF Components agreed in principle
Necessary detailing in progress
Additional information as discussed
Focus on AMBIF Documentation as key
component for implementation based on
possible demand expectations
Focus on possible approaches to AMBIF
implementation with regulatory authorities
4
Phase 2 Interim Report – SF1
•
•
Submitted to ABMI on 25 April 2013
Acknowledged by AFMCGM on 2 May
2013, support mentioned for ABMF’s
present and future activities
5
② Additional Information relevant
for AMBIF since Interim Report
6
Proposed AMBIF Market(s) or Segment(s) for Consideration
Market
governed by
SRO
Accessible to Foreign
Institutional Investors
Institutional
Investors
PBOC
NAFMII
via QFII
(Regulation)
(QFIIs, B/Ds)
(CSRC)
(SSE)
(YES)
HKEx
Market Practice
Professional
Investors
SFC, HKEx
HKEx
YES
Issuing &
Secondary
OTC
Market Practice
Professional
Investors
SFC, HKMA
-
YES
MTN Issuing
(Private Placement)
Market Practice
Market
Participants
-
-
YES
Japan
Issuing
Tokyo PRO-BOND
Law (FIEA)
FSA, TSE
TSE, JSDA
YES
Korea
SME + SME
Foreign Issuers
Issuances
QIB Market
Decree to FSCMA
KOFIA (FSS)
KOFIA
Not at the moment
Economy
PR China
Hong Kong
Indonesia
Professional Market as
Participation of
a result of
Type of Market
Candidate Market
Issuing &
Secondary
Inter-Bank Bond
Market (IBBM)
Access/Participation
(Issuing &
Secondary)
(Qualified Foreign
Institutional Investor)
Issuing
Private Placement
Issuing
Malaysia
Issuing &
Secondary
Issuing
Specified
Investors
Qualified
Institiutional
Buyers
FSCMA defines this
market
Market Practice
Professional
Investors
(KOFIA)
(KOFIA)
YES
Excluded Offers
Law (CMSA)
Sophisticated
Investors
SC Malaysia
-
YES
-
YES
PDEx
YES
-
YES
ThaiBMA
YES
(VBMA)
YES
Exempt Regime
(Listings only)
Qualified Investor /
Qualified Buyer
Market
Membership
Philippines
Issuing &
Secondary
Singapore
Issuing &
Secondary
OTC
Market Practice
Thailand
Issuing &
Secondary
Private Placement
under AI Regime /
OTC
Thai SEC Regulation
Viet Nam
Issuing &
Secondary
(Private Placement)
Law
Participation
Institutional
Bursa Malaysia
Investors
Qualified
Investors /
SEC
Qualified Buyers
Institutional
SGX
Investors
Accredited
Investors (AI,
SEC
includes II &
HNW))
Professional
SSC
Investors
7
Table: AMBIF Investor Types as currently evident in ASEAN+3
Economies and their Legislation; now including Cambodia
u
u
Professional Investor
Law
u
u
u
u
u
u
u
u
u
u
'Offer to Prof. Investors'
HKEx
u
u
u
u
u
u
u
u
u
u
{Professional Investor}
IFSA
Specified Investors
Law
u
u
u
u
u
u
u
u
u
Professional Investors
Law
u
u
u
u
u
u
u
u
u
u
Qualified Institiutional Buyers
Law
u
u
u
u
u
u
u
u
u
u
Sophisticated Investors
Law
u
u
u
u
u
u
Philippines
Qualified Investor, Qualified Buyer
Law, SEC
u
u
u
u
u
u
Singapore
Institutional Investors
Law
u
u
u
u
u
u
Thailand
Accredited Investors
SEC
u
u
u
u
u
u
Viet Nam
Professional Investors
Law
u
u
u
Trustee
u
Trust Companies
CSRC
Subsidiaries of Inv. Types
Qualified Foreign Institutional Investor
Statutory Companies/Boards
u
Private Funds
u
Other (to be specified)
u
Institutional Investors
PBOC
u
Supra Fin. Institutions
'IBBM Investors'
u
Individuals as Fund Managers
Anukret
High Net Worth Individuals
Institutional Investors
Fund Managers
Cambodia
Exchanges
As stated
by
Corporates
Investor Term
Banks
Economy
Finance Companies
Foreign Institutional Investors
Development Funds
Derivatives Businesses
Deposit Protection Agency
Closed-ended Funds
Central Banks
Government Funds
Provident Funds
Mutual Funds
Broker/Dealers
Insurance Companies
Investor Term in each Economy represents the following Types of Investors (expressed as Categories mentioned in Laws, Regulations or Market Practice)
u
u
u
u
u
u
u
u
u
PR China
u
u
u
u
u
u
u
u
u
Hong Kong
Indonesia
Japan
u
u
u
u
u
u
u
u
u
u
u
u
u
u
Korea
Malaysia
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
u
8
Issuance Cost: Update
Context: Members’ request to quantify
potential AMBIF benefits
Many thanks go to Deutsche Bank, HSBC!
 Obtained significant amount of information
 For both international and regional markets
 Some initial observations on next page

9
Issuance Cost: Initial Observations
•
•
•
Typically: international > domestic markets
Since domestic market issuance not required
to tap typical international services
Further normalisation needed because:
Markets’ practices, cost components differ
• Cost assumptions are solid but may not be
directly comparable to AMBIF features
•

May need to differentiate between current
and AMBIF issuance to determine suitable
cost components
10
Accounting/Reporting Standards
•
•
Considered a challenge in context of AMBIF,
based on market visit feedback
Thought to be addressed via IFRS (International
Financial Reporting Standards)
•
•
•
However, research to date indicates that
acceptance is slowing and direct applicability
of IFRS may be limited
Instead, markets and listing places appear
willing to accept multiple standards
Phase 2 Report to reflect this
11
Information on Withholding Tax
PWC has kindly offered to compile the data for ABMF!
Withholding Tax on Interest from Fixed Income Securities
Economy
PR China
Hong Kong
Indonesia
Japan
Korea
Malaysia
Philippines
Singapore
Thailand
Viet Nam
Type of Bonds
WHT Rate
in %
Concession(s), if any
Remarks
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
Government
Corporate
12
Information on Withholding Tax
Envisaged withholding tax (WHT) information
for members’ information and consideration:
•
•
•
Headline (official) tax rates
Concessionary rates, as may exist
Details on concessions
13
③ Addressing Regulatory
Concerns and Feedback
14
Regulatory Concerns/Feedback
•
•
•
•
•
•
Regulatory mandate to be confirmed
Suitable regulatory process, taking into
consideration market-specific regulatory
processes (many/none), multiple regulators
Understanding of investor types for AMBIF
Practical issues on regulatory process
Approach to AMBIF Implementation
One possible Adoption of AMBIF
15
Possible AMBIF Regulatory Processes
Using Typical Modalities of Standardizing Regulations
Difficult
Harmonization
Feasibility
Mutual
Recognition
Acceptance of
Equivalence
Substituted
Compliance
Mutual
Agreement
Target Area
Degree of standardization
16
Strong
16
Understanding AMBIF Investors

Will be addressed in next Chapter
17
Practical Considerations

Please refer to Information Platform
18
One possible Adoption of AMBIF
AMBIF Component
Local Currency
Issuance
Instruments
Available in given Market
✔ Local Currency Issuance
Regulatory Guideline
✔ Straight Bonds, Sukuk
Investors
✔ Licensed Investors, FII
Issuers
✔ Acceptable Issuers
Documentation
✔ e.g. Market Practice
= AMBIF Market
Potential Approach
Prerequisites in place?
~ AMBIF Market?!
19
One possible Adoption of AMBIF
From previous page
•
•
•
•
Key: no (major) changes to existing legislation
and/or regulations
Where no specific regulations exist, licensing
and market practice could be referenced
Potential to bring all AMBIF Components
together in a (single) guideline (to be) issued
by the relevant authority (or domestic
equivalent procedure)
Related guideline may be issued by authority
20
④ Detailing AMBIF Components
21
AMBIF Instruments in Local Currency
•
No strong opinions recorded on proposed
instruments or local currency issuance, but
would like to confirm with members:
Straight bonds and Sukuk?
 Intention not to prevent issuance in foreign
currencies

•
Being other ASEAN+3 local currencies
• Being e.g. USD or EUR
22
AMBIF Investors: Clarification
•
Proposed AMBIF Investor type:
 Investment
•
Investor type meant to represent member
economies varying definitions of professional
•
•
•
•
•

Advisory Businesses
Asset managers
Fund managers
Investment advisors
Investment managers
Mutual Funds / Unit Trusts
Not intended to unify, but to be inclusive
23
AMBIF Investors - FII
•
•
•
Interim Report: no intended limitations or
restrictions for Foreign Institutional
Investors (FII), other than those in place
FII may be seen as representing
potentially significant demand for each
domestic AMBIF bond issuance
FII = investors from other ASEAN+3
markets as well
24
AMBIF Issuers
•
No objection or feedback on AMBIF Issuers
so far, but further detailing desired
•
Who may be interested to issue?
• What may be their considerations?
•
Other relevant information

Intention to provide more detailed info by
14th ABMF
25
⑤ Documentation – Creation of
Voluntary ADRB
26
Update on AMBIF Documents
•
•
•
Creation of Voluntary “Asian Common
Professional Bond Market Practices and
Documentation Recommendation Board”
(ADRB or AMBIF-PDRB) by market
practitioners
Types of docs at present
Basic objectives
27
Expression of General Interest between Markets
- Sample / To be checked with Market Sources
Issuers’ Home Market
PR China
Issuing
Market
Hong
Kong
Indonesia
Japan
PR China
○
○
○
Hong
Kong
○
○
○
Indonesia
○
Korea
Malaysia
Philippin
es
Singapor
e
Thailand
Viet Nam
○
Japan
○
○
Korea
○
○
Malaysia
○
○
○
○
Philippin
es
Singapor
e
○
Thailand
○
Viet Nam
Above matrix is just an image.
○
○
○
28
⑥ Update on proposed
Information Platform
(Based on Dr. Hyun’s Idea)
29
Comparison of individual IP vs. common IP
AMBIF information platform will serve as common platform
to foster standardization of market practices and facilitate
intra-regional cross-border bond issuance and investments.
Individual IP
Common IP
Individual cost
Total cost
Information
management/
sharing
Investment activation
Implement-ability
SCA/Communication
30
Function of Common AMBIF Information Platform
•
Common Infrastructure
for AMBIF Market:
:
common infrastructure for ASEAN+3 members in AMBIF Market
•
Information Sharing System for AMBIF Bond:
:
collect and distribute information of ASEAN+3 AMBIF Bond
•
Supportive System for Substituted Compliance
Approach:
facilitate communication and mutual understanding among ASEAN+3
regulators
:
•
Management System for AMBIF Market:
manage all relevant information of regulatory process and qualification of
market participants
31
Next Step for Discussion
•
•
•
The Establishment of AMBIF Information Platform Board
working together with ADRB as may be required
Study process flow of bond issuance in countries with
existing IP (Malaysia, Indonesia, Thailand, Japan, Korea etc)
Standardize process flow and issuance documents
submitted to regulators to implement AMBIF
32
Remainder of Phase 2
13th ABMF
TOKYO Meeting
SIBOS
Dubai
14th ABMF
JEJU Meeting
Phase 2 Report
Publication
25/26 July
16-19 Oct
Participation by
ADB Secretariat
6/7 Nov
Dec 2013
Draft Phase 2 Report;
AMBIF Conclusions
Editing, formatting
final Phase 2 Report
&
Gathering
of Information for
Phase 1 Updates
33
⑦ Proposed Phase 3 Activities
34
Phase 3 - Proposed Activities
•
•
•
•
Phase 1 Market Guides Report Updates
AMBIF Implementation
Pilot Issue
BCLMV Knowledge Support
35
Phase 3 – Market Guide Update
•
Envisaged for Q1, 2014
•
Members are kindly requested to review
and provide updates, necessary revisions
by end December 2013
Use of SWIFT request form, process
Publication target: April 2014, since
second anniversary of original report + to
be in time for next AFMCGM in May 2014
•
•
36
Phase 3 – AMBIF Implementation
•
•
•
•
Key: decision by regulatory bodies or
delegated authorities on AMBIF Markets
Compilation of agreed AMBIF
Components, Substituted Compliance
Approach and proposed processes, for
use and reference in above decisions
Roll out by/in individual markets
ABMF to create awareness in markets
37
Phase 3 – Proposed Pilot Issue
•
•
•
Key: AMBIF in place
Opportunity to work through existing and
future issues or challenges with pilot
participants
May induce fine tuning of AMBIF
38
Phase 3 – BCLMV Knowledge Support
•
•
•
Expected follow-up to Phase 2 support
Dependent on markets’ specific requests
Support creation/update of Cambodia and
other Economies’ market guides
39
⑧ Introduction of ADRB
(Voluntary working group for
making recommendations on
AMBIF Documentation)
By Mr. Suzuki of Barclays and
Mr. Yanase of NO&T
40
Prof. Shigehito Inukai
Faculty of Law - Waseda University
1-6-1 Nishiwaseda, Shinjuku-ku
Tokyo 169-8050
Matthias Schmidt
ADB Consultant
Office +81 3 3202 2472
Mobile +81 80 3360 7551
shige.inukai@me.com
Office +61 3 95571314
Mobile +61 423 708910
macschmidt@me.com
41
⑨ Questions & Answers
(Session 2)
42