IFR Asia - 28.07.2018

HKEx waits on "corporate" WVRs

HONG KONG EXCHANGES AND CLEARING has pushed

back plans to launch a consultation on

allowing corporate entities to act as the

BENElCIARIESûOFûWEIGHTEDûVOTINGûRIGHTS

HKEx said in April, when it introduced

controversial new rules allowing

“innovative” companies to list with dual-

class shares, that it planned to launch a

consultation on the corporate WVR topic

by July 31.

As the new WVR regime has just

been put in place, HKEx said it would

instead continue to consult with different

stakeholders in order to develop a “broader

consensus” and would update the market at

a later date.

Last month, rival Singapore Exchange

allowed companies with WVR to list

on the main board, including when

CORPORATEûVEHICLESûAREûTHEûBENElCIARIESû

of DCS structures. It said in such cases it

will consider additional enhancements,

including sunset clauses where the

differential voting structures fall away after

a period of time.

Critics of the proposals said that

extending multiple voting shares to

corporate vehicles would defeat the

original purpose of WVRs – allowing

a company’s founder or other key

individuals to drive the company’s

business plan without being subject to the

usual scrutiny from shareholders – and

would risk creating a secondary market in

those shares.

Earlier this month, Chinese smartphone

MAKERû8IAOMIûBECAMEûTHEûlRSTûCOMPANYûTOû

conduct an IPO in Hong Kong with a DCS

structure. Last month, Meituan-Dianping,

a Chinese online food delivery-to-ticketing

services provider, and online steel

MARKETPLACEû:HAOGANGCOMûBOTHûlLEDû

to list with DCS structures. Others are

expected to follow suit soon.

THOMAS BLOTT

People

&Markets

IN BRIEF

SBI

Agreement signed on bad loans

More than 20 Indian lenders led by STATE BANK

OF INDIA have signed a pact to speed up the

resolution of bad loans.

SBI said in an exchange filing last Monday

that its board had approved the inter-creditor

agreement, which gives the lead lender in

a consortium a bigger say in coordinating a

resolution plan.

Under the terms of the agreement, the lead

lender will put forward a resolution plan to

an overseeing committee. The terms of the

resolution plan will then require approval of

66% of lenders before becoming binding.

The lead lender will be able to arrange for the

buy-out of the facilities of dissenting lenders

at a value that is equal to 85% of either the

liquidation or resolution value of the debt,

whichever is lower. Alternatively, dissenting

banks can arrange to sell the debt at 125% of

the liquidation or resolution value.

The agreement is part of a slew of new initiatives

designed to tackle bad debts in Asia’s third-

largest economy. Earlier this year, the Reserve

Bank of India introduced new rules that force

banks to start insolvency proceedings on loans

of Rs20bn (US$292m) if a resolution plan is not

implemented within 180 days of a default.

Mizuho

SEC fine for information leaks

The US Securities and Exchange Commission

fined the US investment banking subsidiary

of MIZUHO FINANCIAL GROUP US$1.25m last

Monday over allegations it failed to safeguard

information on orders from clients in its trading

division.

The SEC alleged that Mizuho’s traders regularly

disclosed information on customers regarding

share buyback orders to other traders and hedge

funds. The information included the identity of

the party placing the order, the order size and

limit price.

Mizuho agreed to pay the penalty without

admitting or denying the SEC’s findings.

SGX

Talks resume with NSE over derivatives

SINGAPORE EXCHANGE has resumed talks with

the NATIONAL STOCK EXCHANGE OF INDIA over a

derivatives trading link.

SGX said in a statement last Wednesday that

the two bourses had restarted “discussions on a

potential collaboration in Gujarat International

Finance Tec-City”. It added that the two

exchanges would “jointly engage and consult

relevant stakeholders” without providing further

details.

SGX and NSE had earlier scrapped talks on

the derivatives link in GIFT, a new financial

hub championed by Prime Minister Narendra

Modi, following a legal tussle over Indian equity

derivatives products offered by SGX.

The Bombay High Court referred the case to an

arbitrator with a decision originally slated for

the first week of February 2019. SGX said on

Wednesday the proceedings had been deferred

pending the outcome of negotiations between

the two exchanges over GIFT.

Rothschild Bank

FINMA probe over 1MDB ends

ROTHSCHILD BANK and one of its subsidiaries

committed serious violations of anti-

moneylaundering rules in relation to 1MDB, the

Malaysian sovereign wealth fund, Switzerland’s

financial regulator said.

The regulator, FINMA, said in a statement

on July 20 it was nonetheless closing its

probe into Rothschild. It will review the steps

the institution has taken to tighten up its

procedures.

Rothschild Bank said it noted the regulator’s

comments and regretted the breaches that

occurred.

“We constantly strengthen our systems and

procedures and are determined to continue to

do so to identify and combat the increasingly

sophisticated financial crime faced by the

industry,” the bank said in a statement.

The investigation is the seventh and last

undertaken by FINMA into 1MDB. Malaysia’s

former Prime Minister Najib Razak, has been

charged with abuse of power and breach of

trust in a graft probe into the fund, which he

set up. He has pleaded not guilty and denied

wrongdoing.

Rothschild Bank is part of Paris-listed

Rothschild & Co.

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