Search results for

This instalment of Corporate Governance Quarterly asks whether shareholders are interested in anything more than the bottom line

Banji Adenusi As a form of financial derivative involving the sale of securities, repos are central to the provision of liquidity in the financing and trading of treasury securities. The Nigerian repo market, however, remains largely dominated by the money and interbank markets as the main liquidity providers. With their global attractiveness, the primary concerns in Nigeria relate to the validity, enforceability of netting provisions, transfer of title and recharacterisation of repos. Bearing in mind that repos can sometimes be said to operate in a manner similar to secured credit transactions, perhaps these concerns are worth highlighting. In Nigeria, the laws applicable to derivatives are equally applicable to repos (section 315 of the Investment and Securities Act), while securities lending appears to be a generic term encompassing a host of transactions including repos. The approach favoured by the Nigerian Securities and Exchange Commission (SEC) is to interpret all types of dealings involving securities as falling within the ambit of section 315. The validity of these transactions is guaranteed, further taking into consideration their non-classification as unlawful gaming contracts.

Five months have passed since the Alternative Investment Fund Managers Directive (AIFMD) was implemented in Norway. Since July 1 2014, a relatively large number of applications have been filed with the Financial Supervisory Authority of Norway (FSAN), concerning both marketing in Norway of non-EEA alternative investment funds (AIFs) of EEA alternative investment fund managers (AIFMs) and AIFs of non-EEA AIFMs. The FSAN have slowly but steadily been working through the pile of applications and after a somewhat slow start in July and August, have now increased the pace. To date, approximately 30% of the filed applications have been handled. Of these, approximately 65% relate to non-EEA AIFs of non-EEA AIFMs and 35% relate to non-EEA AIFs of EEA AIFMs.

France's stock market watchdog has confirmed that it will not implement regulations on high frequency trading (HFT) that would clash with Europe-wide rules.

Regulators must give up on turning back the clock The UK Prudential Regulation Authority's (PRA) proposals for the senior manager regime have drawn criticism from the City over the past month. According to the PRA, the proposals are intended to create a new framework to encourage individuals to take greater responsibility for their actions, and will make it easier for both firms and regulators to hold individuals to account.

Bank of China's RMB 39.94 billion ($6.5 billion) additional tier 1 (AT1) offering proved the depth of Asia's capital markets. The bank's innovative structure has also set a precedent for the rest of the industry.

In late October, the Slovak Parliament adopted a comprehensive amendment to the income tax act, introducing changes in direct taxation that will come into force on January 1 2015. Here, we are provide a brief summary of the key changes introduced in the amendment that affect businesses.

Rose Marie M King-Dominguez Melyjane G Bertillo-Ancheta The 2015 economic forecast for the Philippines is mixed. The outlook is no doubt the result of the many challenges the country has had to face in the past year. From natural disasters, including Typhoon Yolanda, to man-made calamities, such as worsening traffic jams and port congestion, the Philippines has not had an easy time. But despite these setbacks, the country's growth prospects are generally positive, and its credit ratings have been upgraded to investment grade status. Government and policy-makers can do a lot to keep economic indicators in the black, by re-focusing on improving the transparency and stability of rules, and getting regulators to modernise their perspectives.

Jose Luis Sosa In recent years, there have been an increasing number of mergers and acquisitions involving Panamanian bank branches and subsidiaries. This M&A activity has resulted in an increase of regional conglomerates consolidated in Panama that include banks as part of their business holdings. As a result, and in an effort to safeguard the Panamanian financial system from extraneous risk, and beyond its regulatory purview, the Panamanian Superintendence of Banks recently issued Resolution 007-2014 (Resolution 007), which will enter into force on January 1 2015. This extends regulatory oversight to all entities of a single corporate group that includes banks and that are consolidated in Panama, even beyond Panama's borders.

Soonghee Lee Youngwoo Park The Korea Exchange (KRX) opened the marketplace for exchange traded notes (ETN) on November 17 2014. ETN are derivative combined securities that guarantee the same rate of return as that of the underlying index at maturity. They are simpler than equity-linked securities (ELS) in structure and tradable prior to maturity. Since they are derivative combined securities, ETN have the same legal characteristics as equity linked warrants (ELW) and ELS, but differ in structure from ELW and ELS because they are a product linked to the underlying index. Moreover, although ETN provide the return in a similar manner as exchange traded funds (ETF) since both are indexed to the underlying asset, ETN differ from ETF in that they provide a return based on the underlying index at maturity after subtracting the fund fees. Participants of the capital market anticipate that the ETN market, introduced in an effort to advance the Korean derivative products market, will satisfy ordinary investors' demand for a variety of new financial products in the existing low growth, low interest rate environment. Participants also believe that securities firms would be afforded an opportunity to increase their profitability and competitiveness from more varied product offerings. The backdrop for introduction of the ETN marketplace can be explained as follows. The number of investors who are seeking medium risk and rate of return, rather than traditional products such as stocks and bonds, increased in the rapidly aging society. In addition, there arose the need to develop new financial products (such as index linked structured products) so that ordinary investors could make investments in more varied product offerings. Commentators anticipate that there will be more investment opportunities for ordinary investors because the introduction of ETN allows direct investment with a smaller investment amount in various asset classes, while it was previously difficult for such investors to understand and compare the profit structures of derivative combined securities products. Moreover, if index-linked structured products that were previously traded outside the exchange begin to be traded on the exchange, then issues such as misselling, system risk, and low price transparency would be resolved. This would lead to better protection for investors, and ultimately, the creation of profitable products for securities firms. On the other hand, while various pensions and funds are important institutional investors that make the market and provide liquidity as liquidity providers, it has been reported that pensions and funds would not participate in the ETN market in the early stage of the launch because of internal fund management regulations, tax issues, and lack of perceived attractiveness of the market. Therefore, appropriate measures need to be provided to deal with such issues.