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How to avoid conflating inbound and outbound Chinese M&A with financing

Securities legislation in Malaysia was recently amended followed by the issuance by the Malaysian Securities Commission of new guidelines to introduce and make operational business trusts (BTs) as an alternative investment structure in Malaysia. The establishment of BTs swiftly follows the recent wave of high-profile Malaysian-led initial public offerings (IPOs) in 2012, such as Felda Global Ventures, IHH Healthcare and Astro Malaysia Holdings. With the introduction of BTs, investors investing in Malaysian securities can tap into this investment structure which has been available in Singapore since 2006 and Hong Kong since 2011.

RBS managing director, International Capital Market Association (ICMA) board member, and covered bond specialist Tim Skeet discusses recent market developments and the asset class’s future

Some ambitious ideas are driving the transformation of Mongolia’s capital markets. Here’s the inside story on what next to expect from the frontier

Banji Adenusi In April 2013, the Nigerian Stock Exchange (NSE) launched the Alternative Securities Market (ASeM) as a parallel market to its main bourse – having rebranded the second tier securities market. The aim of the ASeM is to provide small and medium-scale enterprises and emerging businesses with a platform to access and raise long-term capital. Further to the launch, the NSE has updated its Green Book, which details the requirements for listing on the ASeM. What is most notable about the ASeM, however, is the flexibility it offers by way of less stringent regulations than would have been available to companies listed on the main bourse, such as the absence of a requirement for capitalisation or shareholders equity. It is important to note that the ASeM is only accessible to publicly-held companies, with such companies having a minimum of two years' operating track record. One key introduction, targeted at ensuring conformity with international best accounting practices and management control, is the requirement that companies listing on the ASeM adopt the international financial reporting standards. The rule book further requires that the company offers 15% of its share capital to the public and be held by not less than 51 shareholders, with a lock-up period of 12 months post-listing, in which the promoters and directors of the company are required to hold a minimum of 50% of their shares held pre-listing in the company, where the listing is in connection with an initial public offering. In addition to this, the company is required to have a designated adviser, whose main responsibility is to ensure that the company meets all disclosure requirements in the ASeM rules.

Lofti Sekkat, chief executive officer of Crédit Immobilier et Hôtelier discusses the key features of Morocco’s covered bond law, and the process of implementing the legislation in a new jurisdiction

Agustin Martin Calmarza, head of European Credit Research & covered bonds at BBVA, assesses the characteristic of different covered bond regimes and how the instrument are becoming a global asset class

Daniel Futej Rudolf Sivak Radka Gerzova Recently, two amendments were passed introducing novelties into the public procurement process in Slovakia. The changes do not enter into force at once, but will take effect gradually up to January 1 2014; however, most of the changes will already be effective as of July 1 2013. A new obligation to use an electronic auction by respective authority will apply only to goods which are readily available on the market. As regards other goods, services and construction works, it will be up to the authority whether it will use an electronic auction. It is not clear what criteria should be used when the authority is deciding whether or not it will use an electronic auction.

Mian Muhammad Nazir Derivatives are one of the most important techniques that financial institutions employ to manage certain risks. However, the ability of Islamic financial institutions (IFIs) to benefit from financial derivatives for risk mitigation purposes is limited as many of the conventional derivatives, in their current form and substance, do not align with the principles of shariah. Many IFIs use shariah-compliant alternatives of most of the financial derivatives in accordance with the guidance of their shariah boards. These alternatives appear to meet the shariah requirements in respect of the form; nonetheless, there remain many issues from the substance perspective that need to be considered seriously in order to have a clear and uniform position throughout the system of Islamic banking, sooner rather than later. Simpler forms of financial derivatives that aim to serve purely as risk mitigation techniques can easily be transformed into shariah-compliant instruments with a wider shariah acceptability. However, some of the more complex and exotic derivatives (particularly credit-linked notes) that entail a dominant financial gain with a possibility of excessive risk will certainly be viewed as instruments breaching shariah principles which prohibit speculation, gambling and so on. Such instruments are not purely for risk mitigation purposes. The ability of IFIs to benefit from such instruments will certainly raise questions and hence affect the overall credibility of Islamic banking and finance, which so far has narrowly escaped the negative effect of such products due to the absence of shariah clearance from the shariah boards.

Clifford Chance’s Peter Voisey and Will Sutton outline the regulatory changes affecting the UK covered bond market, but remain optimistic that clarity and certainty will emerge