Regulators tell derivatives industry to find Libor consensus

Regulators told the world's derivatives market that it must find a common approach for dealing with a sudden death of Libor, the interest rate benchmark used for pricing contracts worth more than $300 trillion globally. Libor became discredited after big investment banks were fined billions of dollars for trying to rig Libor. The London Interbank Offered Rate (Libor) is slowly being replaced with rates compiled by central banks, including Federal Reserve, the European Central Bank and the Bank of England. Britain's Financial Conduct Authority (FCA) has said that Libor is expected to cease after the end of 2021. In preparation for the change, the Financial Stability Board (FSB) said that a "pre-cessation trigger" should be inserted into terms for new derivatives contracts.

S&P sees GCC move ahead of Africa in race for fintech adoption

A new report on the prospects for fintech in the Middle East and Africa has affirmed the importance of the Gulf Cooperation Council (GCC) region. According to Standard & Poor's, the GCC's most advanced centres are Dubai and Bahrain. "The Future Of Banking: Fintech's Prospects in the Middle East and Africa" report identified five factors necessary to propel fintech adoption: human capital, regulation, financial capital, physical infrastructure and demand, either from established financial institutions or end users. It said North and Sub-Saharan Africa still lagged behind the GCC, where banking penetration stands at just under 80%.

Dubai issues new financial centre insolvency law after Abraaj collapse

Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum issued a new insolvency law for companies operating in the Dubai International Financial Centre (DIFC). The new law has been issued following the collapse of Dubai-based private equity firm Abraaj. The firm had a row with some investors over the use of money in a $1 billion healthcare fund. The new law introduces a "new debtor in possession bankruptcy regime" for debtors that have filed for bankruptcy but still hold assets. Abraaj, its founder Arif Naqvi and a former executive are being investigated by the U.S. Securities and Exchange Commission on U.S. charges that they defrauded investors.

#Saudi securities regulator awards first two #fintech licences

Saudi Arabia's securities regulator approved its first two financial technology licences on Tuesday. The Capital Market Authority (CMA) approved licences allowing Manafa Capital and Scopeer to offer crowdfunding investment services on a trial basis. Individual investors will use electronic platforms operated by the companies to fund small and medium-sized enterprises in exchange for shares in those enterprises. The CMA said it would receive applications for more fintech licences later this year. The Saudi central bank has also thrown its weight behind fintech, as it signed a deal with U.S.-based Ripple in February this year.

$3 trillion sovereign wealth funds agree framework for vetting asset managers climate credentials

Sovereign wealth funds (SWF) from Norway, New Zealand and the Middle East have drawn up a framework to better target their collective efforts on climate change. The agreed principles advocate integrating climate considerations into their investment processes, as well as make recommendations for manager selections and participating in financial markets. The One Planet SWF Group consists of the Abu Dhabi Investment Authority, Kuwait Investment Authority, the New Zealand Superannuation Fund, Norges Bank Investment Management of Norway, the Public Investment Fund of the Kingdom of Saudi Arabia, and the Qatar Investment Authority, who collectively manage over $3 trillion in assets.

#Kazakhstan's financial hub adds Islamic arbitration capabilities

Kazakhstan's financial hub, the International Arbitration Centre (IAC) is adding specialists in Islamic law to its dispute resolution services. The IAC provides mediation and arbitration services as an alternative to traditional court litigation. The IAC is an independent body launched to complement the Astana International Financial Center (AIFC), an economic zone aimed at developing the republic's financial sector. IAC Chairman Barbara Dohmann said that Islamic finance is now part of everyday business dealings across the region, so the ability to handle civil and commercial disputes in Islamic finance has become very important.

Dubai investors digest implications for #sukuk market after Dana Gas ruling

A High Court judge in London ruled in favour of creditors in a case regarding the validity of the purchase undertaking for about $700 million of sukuk issued by Dana Gas. The idea that Dana Gas has been able to assert for the past five months that its own sukuk were non-sharia-compliant has struck many observers as unusual. Judge George Leggatt said that Dana Gas' challenges to the validity and enforceability of the purchase undertaking were unfounded and declared the purchase undertaking for Dana's sukuk as valid and enforceable.

Global #debt may be understated by $13 trillion - BIS

Global debt may be under-reported by around $13 trillion because traditional accounting practices exclude foreign exchange derivatives. Bank for International Settlements (BIS) researchers said it was hard to assess the risk this missing debt poses, but that the main worry was a liquidity crunch like the one that seized FX swap and forwards markets during the financial crisis. The $13 trillion exposure exceeds the on-balance-sheet debt of $10.7 trillion that was owed by firms and governments outside the United States at end-March. The fact these FX derivatives do not appear on balance sheets means little is known about where the debt lies. According to Claudio Borio, head of the BIS's monetary and economic department, the debt remains obscured from view.

Islamic finance body AAOIFI seeks to update guidance on #murabaha contracts

The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued a draft standard on murabaha to update guidance on the most common financing tool used by Islamic banks. AAOIFI is conducting a wide review of its standards to encourage convergence of industry practices and increase consumer appeal. The proposed standard would supercede two earlier ones on murabaha. It would also cover new areas such as the accounting treatment on the liability side of a murabaha transaction. AAOIFI is seeking industry feedback on the draft until the end of March, aiming to make the final version effective from January 2019.

Islamic finance: quarterly update

The fourth quarter of 2016 saw proposals published by AAOIFI for standards on central sharia boards as well as new governance rules for Islamic banks in Kuwait and the Federal Territory of Labuan. The quarter also saw the IFSB issue a technical note on stress testing for institutions offering Islamic financial services. The proposed AAOIFI standard on central sharia boards is intended to provide guidance for strengthening corporate governance and thereby increase the consumer appeal of sharia-compliant financial products. It covers several aspects such as the appointment, composition and dismissal of board members, tenure of the board, functions of the central sharia board, responsibilities of the appointing authority, fit and proper criteria, and independence.

Islamic finance: quarterly update

The third quarter of 2016 saw Bank Negara Malaysia publish policy documents on ijarah, hibah, qard and wadi'ah. The Central Bank of Bahrain launched a consultation on a proposed sharia governance module and the Indonesian government launched a 10-year Islamic finance master plan. The Islamic Financial Services Board (IFSB) and the Arab Monetary Fund signed a memorandum of understanding (MoU) to establish a framework to promote initiatives that foster the development of the Islamic finance sector in the Arab region. The MoU is for an initial period of three years.

#Singapore charges ex-BSI banker with forgery in 1MDB-linked probe

Singapore charged a former wealth manager at Swiss private bank with forgery as part of a money laundering investigation related to 1Malaysia Development. The forgery charge is the seventh filed against Yeo Jiawei, a 33-year-old Singaporean banker. While the charges didn't mention 1MDB by name, they stem from investigations into the fund's money flows. The prosecutors charged Yeo with "fraudulently" signing a reference letter to the head of anti-money laundering and sanctions compliance of Citigroup Inc in Europe.

#Banks make blanket exits from businesses and account closure, regulators disagree

In response to fears of being fined for compliance failings banks are making blanket exits from certain businesses or closing clients' accounts on a large scale. Regulators disagree with such wholesale withdrawal from certain areas of business, even if it is done in the name of de-risking. Such de-risking moves are being carried out mostly at the large international banks, however Asia has seen very little de-risking so far.

Rising corruption a concern, Africa, Russia, and Middle East the worst, says report

According to The Fourth Annual Global Anticorruption Survey corruption remains a growing concern. Some 90 percent of those polled replied that their industries faced corruption risks, up from 85 percent last year. Also, 28 percent of respondents said the risk was significant, compared to 22 percent last year. The numbers for Africa and the Middle East increased significantly from last year's figures of 59 percent and 45 percent, respectively. For Russia, the score improved slightly, dropping two percentage points from 75 percent last year.

Islamic finance: quarterly update

The first quarter of 2016 saw concept papers on Qard and Hibah issued by Bank Negara Malaysia. The Islamic Financial Services Board (IFSB) has provided a further update on the financial soundness and growth of Islamic banking systems. The International Monetary Fund (IMF) has published a working paper on Monetary Policy in the Presence of Islamic Banking. Concept papers on Qard and Hibah In January, Bank Negara Malaysia (BNM) issued a concept paper on Qard. The concept paper is divided between the sharia and operational requirements in relation to the operationalisation of Qard contract.

Singapore central bank asks banks to provide details of 1MDB-linked dealings

Singapore's central bank has asked financial institutions to provide details of any transactions linked to Malaysian state investor 1Malaysia Development Berhad (1MDB) as part of its probe into possible money-laundering in the city state. The statement came late Thursday after it was reported earlier this week that the Monetary Authority of Singapore (MAS) has reportedly asked close to 40 banks with a presence in Singapore to provide information linked to 1MDB. Australia and New Zealand Banking Group (ANZ) and National Australia Bank (NAB) are believed to be among those queried. ANZ and NAB both declined to comment.

U.S. says it's not deterring foreign banks in Iran

The United States is not standing in the way of foreign banks doing business with Iran, a senior U.S. official said, but his comments appeared unlikely to satisfy frustrated businessmen and Iranian officials. Most international sanctions against Iran's economy were lifted in January after Tehran implemented a deal with world powers to curb its nuclear programme. But Washington kept some sanctions that were originally imposed over missile proliferation and alleged support of terrorism. The fear of being caught up in those remaining sanctions has deterred most foreign banks from restoring links with Iran, angering the Iranian government.

Ratings agencies could still be better supervised says EU auditor

Ratings agencies in the European Union, which came under fire during the financial crisis for the verdicts they gave on sub-prime debt, still need to be better supervised, the bloc's auditor said on Monday. The European Court of Auditors said that the European Securities and Markets Authority's supervision of the agencies since 2011 was well established, but not fully effective. Cumbersome registration rules and central bank hurdles are making it harder for smaller credit ratings agencies to compete with the "Big Three" in the EU, the report concluded. Ratings agencies came under the gun during the 2007-09 financial crisis.

Light-touch regulation of 'fintech' is critical for financial inclusion, say experts

Regulators in developing countries need to find a new approach to supervising digital financial services or they risk hampering the efforts to increase financial inclusion, researchers have warned. Ross Buckley, chair of international finance law and Scientia Professor at UNSW Australia, said over-regulation posed the greatest threat to the development of the nascent fintech industry in developing countries. In many poorer areas the combination of finance and telecommunications technology was the only way to deliver banking services cost-effectively, he said.

INTERVIEW-Islamic finance body AAOIFI to revamp standards, expand agenda

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is revamping key standards and boosting its engagement efforts with the industry, part of an ambitious reform agenda for the Bahrain-based body. A revised standard for sukuk and a new one covering the sale of debt are among major efforts planned for next year, secretary-general Hamed Hassan Merah told Reuters in an interview. Industry bodies like AAOIFI have been urged to adapt in a sector that has grown fast but remains fragmented across its core centres in the Middle East and Southeast Asia.

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