Global Regulatory Briefing

OCTOBER 15

(I) REGULATORY REFORM & STRUCTURES BRAZIL - Brazil's Vale raises investment under government US – U.S. Congress panel approves OTC derivatives rules, pressure step toward final bill CHINA - China to standardise Open-End Mutual Funds EU - EU directive may cost hedge funds 3.2 billion euros - Fees – report FSA report (IV) TAX EU - EU wary on some derivatives market reforms - sources US – U.S. offshore tax amnesty draws 7,500 evaders, GERMANY - Deutsche CEO says Europe banks should crackdown expands consolidate US – Obama committed to ending international corporate tax GLOBAL - WTO-style body may be needed for banking “loopholes” sector – British regulator CAYMAN ISLANDS - Cayman Islands woo French business UK – British banks unclear on how supervision will work with tax accord US – U.S. stock, futures regulators mull joint enforcement CHINA - US Treasury declines to call China a forex squad - sources manipulator (II) FINANCIAL CRISIS JAPAN - Japan's Fujii defends right to speak out on forex US - U.S. warns on commercial real-estate, urges loan THAILAND - Thai central bank says to act on forex, diversify modifications reserves NETHERLANDS - Dutch bank DSB collapses, buyers CHINA – China to permit partnerships to buy stocks – draft withdraw rules JAPAN - Japan plans incentives for loan moratorium ASIA – South Korea says agrees with China to consider free- JAPAN – Japan central bank delays exit from corporate trade deal finance support RUSSIA - Joint bid delays Russian WTO entry significantly, IRELAND - Irish "bad bank" to get down to work next month negotiator says NIGERIA - Bad loans at 5 Nigerian banks total $2.6 billion – US - U.S. trade deals could languish for another year central bank CHINA - China bans foreign investment in online games BAHRAIN - Algosaibi's TIBC owes $2 bln to banks, source industry says MEXICO - Mexican senators to seek ruling in Citigroup UK – Royal Bank of Scotland considering branch sale to ownership debate appease EU - source GLOBAL - New data technology trade rules needed -Microsoft ICELAND - Iceland prime minister says UK, Dutch holding up US - Republicans urge Obama to roll back "Buy American" IMF aid over bank losses plank in stimulus UK – UK REGULATOR discouraged foreign banks IT saw as (VI) EXCHANGES & TRADING INFRASTRUCTURE risky – report US – Securities regulator to consider U.S. rules for dark pools GLOBAL - US falls to 3rd in financial development ranking, Oct. 21 after UK, Australia US - Fast traders push alternative US risk oversight plan (III) ENFORCEMENT, CORPORATE GOVERNANCE & SOUTH KOREA – Korea Exchange head resigns, cites FINANCIAL REPORTING pending end of monopoly UK - FSA wants to vet top bank appointment shortlists (VII) FUNDS MANAGEMENT & PRIVATE EQUITY UK – Regulator’s censure on trading practice may set new US – California pension-fund giant launches probe of precedent placement agent fees UK – Major foreign banks in Britain agree to G20 pay rules (VIII) COMMODITIES & ENERGY HUNGARY – Hungary to hold talks with banks on currency - CHINA / RUSSIA China, Russia bolster ties with gas, trade lending limits deals EU - EU to strictly apply state aid, competition rules - Barroso TAIWAN - Taiwan to study whether to increase gold in FRANCE - France's Lagarde dissatisfied with international reserves accounting rule plan (IX) ISLAMIC FINANCE CHINA – Major bank loans slow as regulator hits brakes MALAYSIA – Sukuk plan by Malaysia’s PAAB signals market UK – UK halts business with Iran firms on nuclear fears may be thawing US – Bank of America agrees to give U.S. more details on (X) STATE ENTERPRISES AND WEALTH FUNDS Merrill GERMANY - New German coalition aims to review JAPAN - Japan regulator investigates BNP Paribas - government stakes - document newspaper CHINA – China Development Bank may acquire Stockfly GERMANY - Hypo Real Estate is nationalised with squeeze Securities – report out CHINA – China wealth fund to keep buying shares in major Chinese banks

GLOBAL REGULATORY BRIEFING OCT. 15

GLOBAL - Excessive transparency push for sovereign funds POLAND - Poland drafts legislation to expand broadband harmful - China BRAZIL - Brazil plans new rules on broadband speeds MEDIA & PRESS FREEDOM FRANCE - France moves towards opening up online CHINA - China’s Hu, global media, differ at Beijing forum gambling CHINA - Battle for control shakes China's Caijing magazine PEOPLE UK – Twitter campaign forces retreat on UK media gag order CHINA - Bank of China exec to take up senior IMF post - ARGENTINA - Argentine Senate passes media reform bill source TURKEY - Dogan Yayi n says bank accounts frozen in tax row FRANCE - Bank of France's Noyer to get second term TELECOMS & INTERNET US - U.S. Senate confirms three nominees to futures MEXICO - Mexico body rules Telmex dominant in long regulator distance US - US top court to hear appeal by Enron's Skilling GERMANY - Germany gives green light for 2010 digital US - Lazard CEO Bruce Wasserstein dies at 61 frequency auction US – U.S. regulator questions Google Voice after lawmakers seek probe

WEEK IN BRIEF

Regulatory reform took a big step in the United States when a congressional committee passed an overhaul of derivatives regulation. Japan’s new government, testing its economic impact, made waves with pressure on the central bank not to ease a stimulus measure and comments about currencies. Britain’s securities regulator showed news signs of its ambition, including by telling bankers it intended to vet the shortlists for senior financial industry hires.

QUOTES

"While the U.S. and China use the (financial) crisis to create large and competitive institutions, Europe threatens to be left behind." Deutsche Bank Chief Executive Josef Ackermann

"While there have been some positive signals of late, the financial system remains fragile and key trouble spots remain (such as commercial real estate).” U.S. Federal Reserve Board Governor Daniel Tarullo.

"I am still not convinced who will have the appetite and legal wherewithal to take away the punchbowl for an individual institution." British Bankers’ Association deputy chief executive, Sally Scutt, expressing doubt about government plans for a new national body to safeguard financial stability.

"Those one-off costs, they are very significant and we do not think they can be justified." UK Financial Services Authority official Dan Waters, discussing an agency finding that proposed EU regulations cost the funds industry 3 billion euros and shrink fund choices by 40 percent.

"One of the key questions we expect relevant senior management of a firm to be able to answer is: 'What are the circumstances under which the firm will fail?'” UK Financial Services Authority, in letter to financial institutions outlining its expectation to vet shortlists of their senior appointments.

This Briefing is produced by Reuters News service. Contact [email protected] for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited. GLOBAL REGULATORY BRIEFING OCT. 15

"You add all of this up and it means increased risk for anyone still hiding assets offshore. The IRS has new momentum in this entire area and in the coming months our efforts will only intensify." U.S. Internal Revenue Service Commissioner Doug Shulman, announcing an expanded international crackdown on offshore tax evaders, after an amnesty program drew about 7,500 wealthy Americans.

"I knew back in October or November, the worst of times, it was a good time to invest. But could we do it? I don't think so, because the whole country would be accusing us, 'Are you crazy? Everyone thinks cash is king.'" Jin Liqun, chairman of the board of supervisors of sovereign wealth fund China Investment Corp, in interview with Reuters.

"SWFs are not publicly traded companies. We do not have obligations to publish quarterly information to the public. Indeed, this kind of quarterly disclose has done more harm than good. It has encourages managers to do reckless things." Jin, same interview.

"China will ultimately decide its own fate, but unless the digital door is opened opportunities will be lost and potential will not be realized." News Corp chief Rupert Murdoch, in a speech delivered in the Great Hall of the People in Beijing.

"The United States talks about a strong dollar, but in reality the currency is becoming weak. American people have a sense of crisis about their own currency." Japanese Finance Minister Hirohisa Fujii

"(Treasury) Secretary (Timothy) Geithner's often spoken with the administration saying a strong dollar is in our interest. That's a true statement about America ... and that's our policy." U.S. National Economic Council Director Lawrence Summers.

"Some newspapers describe me as a rare finance minister who speaks out on currency policy. That's wrong. It's the past finance ministers who didn't speak out on currency policy who were wrong." Fujii

FINANCIAL SERVICES

(I) REGULATORY REFORM & STRUCTURES

US – U.S. CONGRESS PANEL APPROVES OTC DERIVATIVES RULES, STEP TOWARD FINAL BILL

The Obama administration scored its first financial regulation reform victory in months when a U.S. congressional committee approved new regulations for the $450-trillion over-the-counter derivatives market. The House of Representatives Financial Services Committee voted 43-26 largely along party lines in favor of the rules after months of intense lobbying by major banks and corporations to shape legislation proposed by the Obama administration and modified in recent days during House debate. Committee Chairman Barney Frank tweaked his version of the Obama administration's OTC derivatives bill - - the committee approved an amendment to require that standardized swaps be traded on an exchange or equivalent electronic platform where deals involve only financial speculation. (Reuters, Oct. 15)

GLOBAL REGULATORY BRIEFING OCT. 15

EU - EU DIRECTIVE MAY COST HEDGE FUNDS 3.2 BILLION EUROS - FSA REPORT

Hedge funds and private equity could face more than 3 billion euros in costs, and investors could see fund choice shrink by up to 40 percent due to proposed new EU rules, a report for Britain’s Financial Services Authority said. The analysis of the impact of the Alternative Investment Fund Managers (AIFM) directive, conducted by Charles River Associates, found that it could load one-off costs of up to 3.2 billion euros ($4.77 billion) on the affected parts of the funds industry. The draft directive proposes measures requiring managers of funds to register, submit data, limit leverage and for non-EU managers to meet certain requirements to offer funds within European member states. The costs arising from the proposed directive stem from the one-size-fits-all nature of the legislation, said Dan Waters, sector leader for asset management at the FSA. Hedge funds would bear the brunt of the costs, shouldering 1.4 billion euros in additional costs in order to comply with the new directive. Private equity firms could see one-off costs of up to 756 million euros and bear the largest ongoing compliance costs -- 248 million euros -- the study found. (Reuters, Oct. 15)

EU - EU WARY ON SOME DERIVATIVES MARKET REFORMS - SOURCES

Banks should be "incentivised" but not forced to shift privately-negotiated derivatives contracts onto exchanges to cut risk, the European Union's executive will say in a policy discussion paper due Oct. 20, according to people familiar with the situation. Incentives anticipated in the European Commission paper would likely comprise heavier capital charges on banks which trade OTC contracts that are not standardised or centrally cleared, the source added. The paper is also expected to push for greater transparency and for a central data repository. (Reuters, Oct. 13)

GERMANY - DEUTSCHE CEO SAYS EUROPE BANKS SHOULD CONSOLIDATE

Deutsche Bank Chief Executive Josef Ackermann warned that Europe, unlike China and the United States, was in danger of missing an opportunity to consolidate its banks in the wake of the credit crisis. The United States had used the crisis to create large, competitive, international banks through mergers, he said. At the same time, he told a conference in Frankfurt, banks in China had grown to become among the largest internationally. Ackermann said the crisis was a chance to create pan-European bank supervision. He urged that some of the measures that have helped to stabilise the banking system be made permanent, such as a cooperation among central banks to provide foreign exchange swap facility -- a measure that has helped Euro zone banks maintain U.S. dollar liquidity. (Reuters, Oct. 12)

GLOBAL - WTO-STYLE BODY MAY BE NEEDED FOR BANKING SECTOR – BRITISH REGULATOR

A global body with legal powers may eventually be needed to enforce the world's new financial rules, Britain's Financial Services Authority (FSA) said. The FSA's newly appointed director of international affairs, Verena Ross, proposed a “strong secretariat” for the Financial Stability Board, the G20’s new forum for coordinating financial rules. She said there may be a case for exploring a more formal global regulatory framework, such as a treaty setting up a body with legal powers of enforcement like the World Trade Organisation. But the suggestion was met with scepticism from Jacques de Larosiere, the architect of a planned revamp of EU financial supervision. He said there was no political appetite for such a new body and only the International Monetary Fund could have the power to check on a country’s financial compliance. (Reuters, Oct. 14)

UK – BRITISH BANKS UNCLEAR ON HOW SUPERVISION WILL WORK

Britain's banking association cast doubt on plans for a new national body to spot asset bubbles and stop them from getting out of control, saying its members were not sure how it would work. The British government is due to propose legislation to turn the current informal "tripartite" setup -- sharing authority among Financial Services Authority, Treasury and Bank of England -- into a Council for Financial Stability to improve coordination and communication and head off any future replays of last year's crisis. But the British Bankers' Association said it was not sure how the council would intervene in practice. (Reuters, Oct. 14)

US – U.S. STOCK, FUTURES REGULATORS MULL JOINT ENFORCEMENT SQUAD - SOURCES

U.S. securities and futures regulators are considering creating a joint enforcement squad to investigate and root out fraud in the markets, two sources familiar with the matter said. The new squad would be made up of staff from the Securities and Exchange Commission and the Commodity Futures Trading Commission, who would come together to coordinate and manage joint investigations, the sources said. The "task force" is one of the recommendations being considered by SEC and CFTC commissioners in an effort to end a turf fight over market jurisdiction. (Reuters, Oct. 15)

(II) FINANCIAL CRISIS

US - U.S. WARNS ON COMMERCIAL REAL-ESTATE, URGES LOAN MODIFICATIONS

U.S. regulators are encouraging banks to restructure commercial real estate loans, which they view as one of the greatest challenges that could compromise the industry's recovery. Officials are close to finalizing guidance that would encourage banks to recognize potential losses in their commercial real estate portfolios and not simply renew troubled loans to delay loss recognition, regulators told a Senate banking subcommittee. Comptroller of the Currency John Dugan said credit quality is deteriorating across almost all classes of banking assets, in nearly all sizes of banks, and characterized commercial real estate as the "greatest challenge" facing banks. (Reuters, Oct. 14)

NETHERLANDS - DUTCH BANK DSB COLLAPSES, BUYERS WITHDRAW

Dutch bank DSB collapsed after a run on the bank cost it more than 600 million euros ($894.2 million) in deposits in 12 days. A government-led plan to rescue DSB via a consortium of five larger competitors also failed, and administrators said this week all potentially interested buyers had pulled out. Central bank President Nout Wellink said he expected the bank would probably be liquidated. A liquidation would help fund the guarantee on the bank's deposits, which otherwise have to be insured by other chartered Dutch banks. Dutch authorities including the Finance Ministry, the central bank and the financial markets supervisor are investigating. (Reuters, Oct. 14)

JAPAN - JAPAN PLANS INCENTIVES FOR LOAN MORATORIUM

Japanese Banking Minister Shizuka Kamei said he would use bank inspections and other measures to encourage lenders to grant his proposed loan repayment moratorium to small firms struggling to get financing. Kamei also told Reuters in an interview he did not plan to ease capital requirements for struggling Japan- focused banks but said the regulator could be more "flexible" in dealing with them. Kamei, an outspoken critic of U.S.-style capitalism, has been pushing for a loan moratorium since he was appointed banking minister last month. His plan, which would allow small firms to forgo repayment of loans for up to 3 years, will be submitted to parliament as early as this month and it has unnerved investors. The plan GLOBAL REGULATORY BRIEFING OCT. 15

will not be legally binding for banks and other financial institutions, there are "incentives" for lenders to heed a debt moratorium request by their borrowers, Kamei said. (Reuters, Oct. 14)

JAPAN – JAPAN CENTRAL BANK DELAYS EXIT FROM CORPORATE FINANCE SUPPORT

The Bank of Japan deferred a widely anticipated decision to withdraw support for corporate finance after the government pressed the central bank to consider the economic cost of a retreat from credit markets. Finance Minister Hirohisa Fujii kept up the pressure after the central banks’ announcement, saying the central bank's view of the economy was too rosy. The central bank’s decision is largely inconsequential for the corporate finance market which has mostly recovered from the crisis. But the political pressure on the central bank meant the outcome may define its relationship with a new government, still fumbling with the levers of power in the world's second largest economy. (Reuters, Oct. 14)

IRELAND - IRISH "BAD BANK" TO GET DOWN TO WORK NEXT MONTH

Legislation setting up Ireland's 54 billion euro "bad bank" passed its first parliamentary hurdle and work on valuing risky commercial property loans to be taken from banks is set to begin as early as next month. Ireland last year issued a guarantee for bank liabilities worth some 400 billion euros, then injected 11 billion euros of capital into its top lenders. It now wants the National Asset Management Agency to complete the task of cleaning up the sector. NAMA's business plan, published by the finance ministry this week, assumes the relevant legislation will be enacted in early November, with valuation focusing on the 25 largest borrowers set to start in November or December. The government is prepared to provide more capital to banks should they need it but it wants to avoid further full nationalisations if possible, Finance Minister Brian Lenihan told parliament. (Reuters, Oct. 14)

NIGERIA - BAD LOANS AT 5 NIGERIAN BANKS TOTAL $2.6 BILLION – CENTRAL BANK

Five undercapitalised Nigerian banks have notched up bad loans totalling nearly 400 billion naira ($2.6 billion), the central bank said. This brings the total amount of non-performing loans owed to 10 of Nigeria's 24 banks to more than 1.5 trillion naira, of which only 135.6 billion has been recovered. The central bank published a list of more than 600 firms, individuals and state bodies that have large outstanding loans owed to Bank PHB, Equitorial Trust Bank, Spring Bank , Wema Bank and Unity Bank. The regulator on Oct. 2 announced it would inject $1.3 billion to four of the five banks after auditors found they were facing a grave liquidity crisis that posed a threat to the banking system. (Reuters, Oct. 15)

BAHRAIN - ALGOSAIBI'S TIBC OWES $2 BLN TO BANKS, SOURCE SAYS

Bahrain-based The International Banking Corporation (TIBC), owned by troubled Algosaibi Group, owes $2.07 billion to banks, and it is unclear if its assets can be recovered to pay creditors, a source familiar with the matter said. TIBC, owned by Saudi group Ahmad Hamad Algosaibi & Bros (AHAB), is part of a wrangle between AHAB and Saad Group, involving a debt pile estimated at $22 billion and that has shocked the Middle Eastern banking community. The Central Bank of Bahrain (CBB) assumed control of TIBC and Saad Group's Bahrain-based Awal Bank in July 2009, and appointed external administrators to protect creditors' claims. (Reuters, Oct. 12)

UK – ROYAL BANK OF SCOTLAND CONSIDERING BRANCH SALE TO APPEASE EU - SOURCE

Royal Bank of Scotland is considering a plan to sell just over 10 percent of its British branches in a move to ease EU concerns over state aid, a source familiar with the matter said. The bank could sell its 312 RBS-

branded branches in England and Wales to satisfy the European Commission, which has demanded disposals to compensate for billions of pounds in state aid received by the bank since it was bailed out a year ago. RBS, 70 percent owned by Britain, uses the RBS brand for retail branches mostly in Scotland. South of the border, these tend to focus on small business banking -- a sale would therefore address a key area of competition concern. RBS branches operating under the NatWest name, its main retail brand, were not expected to be affected. (Reuters, Oct. 14)

ICELAND - ICELAND PRIME MINISTER SAYS UK, DUTCH HOLDING UP IMF AID OVER BANK LOSSES

Iceland's prime minister accused Britain and the Netherlands of holding up aid from the International Monetary Fund because of a rumbling dispute over bank deposit losses. Prime Minister Johanna Sigurdardottir expressed frustration in Parliament that an IMF economic aid programme had become linked to Iceland's debts to Britain and the Netherlands, which stemmed from more than $5 billion in losses the two countries covered when Icelandic bank Landsbanki failed last year. The IMF has made no official comment linking the two issues and a spokeswoman for the Dutch finance ministry dismissed the Icelandic statements. The island struck a deal with the two countries in June to repay them but later added repayment limits and a 2024 expiry date for the accord. Britain and the Netherlands have not endorsed the amendments, leaving the Icelandic government needing a solution palatable to both parliament and creditors. An Icelandic official said last week the government might soon unveil a new draft law on reimbursing Britain and the Netherlands, though uncertainty whether it will win enough support in parliament is likely to make the coalition cabinet prefer a last-minute accord with Britain and the Netherlands. (Reuters, Oct. 15)

UK – UK REGULATOR DISCOURAGED FOREIGN BANKS IT SAW AS RISKY – REPORT

Britain’s Financial Services Authority has actively discouraged up to 10 European banks deemed potentially unstable from establishing branches in London, but it is prevented by EU law from stopping them, the Daily Telegraph reported, citing senior sources at the regulator. The pressure comes after the Treasury spent about 7.5 billion pounds to protect savers after the Icelandic banking crisis. (Daily Telegraph, Oct. 12)

GLOBAL - US FALLS TO 3RD IN FINANCIAL DEVELOPMENT RANKING, AFTER UK, AUSTRALIA

The United States slipped from first to third place, behind the UK, and Australia, in a ranking of financial development released by the World Economic Forum, as the global financial crisis badly hurt bank stability in developed countries. While most of the 55 countries covered by the report saw a significant drop in their financial scores, emerging economies fared comparatively better in the ranking, which takes into account some 120 variables from stability to size and depth of capital markets. Australia, one of the first countries to start withdrawing monetary stimulus, rose from 11th to second on the overall index, underpinned by a combination of bank efficiency and stability, as well as low risk of sovereign debt crisis. Australia and Brazil were among the few countries to see a modest improvement in their overall financial development indicator, despite the impact of the crisis. At the bottom of the overall ranking are Ukraine, Bangladesh and Venezuela. (Reuters, Oct. 8)

(III) ENFORCEMENT, CORPORATE GOVERNANCE & FINANCIAL REPORTING

UK - FSA WANTS TO VET TOP BANK APPOINTMENT SHORTLISTS

Britain’s Financial Services Authority (FSA) said it wants to closely vet senior job candidates for suitability when top banks draw up shortlists -- not after they pinpoint a preferred candidate. In a letter to 5,000 chief executives of financial institutions, the FSA said it expected to be engaged early in the recruitment process -- or companies risked appointment announcements being derailed. A key issue will be whether the candidate understands the insitutions’ vulnerability and how mitigate the risk of failure. GLOBAL REGULATORY BRIEFING OCT. 15

Since October 2008, when the FSA started scrutinising top banking candidates in the wake of the credit crisis, it has quizzed 172 candidates for top positions. Eighteen withdrew applications, it said. (Reuters, Oct. 14)

UK – REGULATOR’S CENSURE ON TRADING PRACTICE MAY SET NEW PRECEDENT

The UK Financial Services Authority (FSA) censured two Dresdner Kleinwort employees for insider trading ahead of a formal announcement of floating rate notes by Barclays. The action may establish a precedent restricting significantly the legal defence of “accepted market practice” in insider trading cases, and force a wider re-examination of entrenched practices across the financial markets in London. (Reuters, Oct. 13)

UK – MAJOR FOREIGN BANKS IN BRITAIN AGREE TO G20 PAY RULES

Major foreign investment banks operating in London have agreed to obey G20 and Financial Services Authority rules on remuneration, starting with payments for performance this year, the Treasury said. Morgan Stanley, Bank of America, UBS, Credit Suisse, Citigroup, Goldman Sachs and JP Morgan signed up to the commitment after a meeting with Treasury minister Paul Myners. European Union banks BNP Paribas, Deutsche Bank and Societe Generale will obey the G20 guidelines in line with their national regulators and seek to follow the FSA rules -- which come into force in 2010 -- for UK-based staff. The agreement follows a similar announcement last month involving major British banks as Britain seeks to clamp down on banks' risky behaviour which many blame for triggering the financial crisis. (Reuters, Oct. 14)

HUNGARY – HUNGARY TO HOLD TALKS WITH BANKS ON CURRENCY - LENDING LIMITS

Hungarian Prime Minister Gordon Bajnai said he would hold talks with the central bank and commercial banks to make sure a proposal to limit foreign currency lending did not restrict economic growth. Hungary's central bank has proposed regulations to limit foreign currency lending to cut the country's vulnerability in a financial crisis, but Hungary's top banker has said the plan is misguided and could deepen the recession. Bajnai said in a London speech that the central bank had the right intention but added that he would be concerned if the bank's move limited lending too much in the short term as it could hurt economic growth. The central bank had been negotiating the regulations with the commercial banks, he told a later news conference. Finance Minister Peter Oszko later said in a televised interview that the lending restrictions would not be introduced before next year. (Reuters, Oct. 9, EcoNews, Oct. 12)

EU - EU TO STRICTLY APPLY STATE AID, COMPETITION RULES - BARROSO

European Commission President Jose Manuel Barroso said he would strictly enforce the European Union's competition and state-aid rules, despite calls for a less rigorous approach. Barroso, who secured a second five-year term last month, has promised a new industrial policy to increase Europe's competitiveness but has given few details. He said in a debate on Europe’s future that he was confident in the commission’s rules and they would be implemented “to protect the integrity of the internal market.” Some economists say the EU's state aid rules, intended to prevent any undue distortions of competition, should no longer be applied so rigorously because European markets are now more open and face strong competition from non-EU countries. (Reuters, Oct. 9)

FRANCE - FRANCE'S LAGARDE DISSATISFIED WITH INTERNATIONAL ACCOUNTING RULE PLAN

France will voice dissatisfaction with proposed changes to accounting rules at a gathering of ministers in Luxembourg next week, Economy Minister Christine Lagarde said. France has taken issue with plans put forward by the International Accounting Standards Board (IASB) to fast-track changes to its IAS39 fair value rule, made as part of global efforts to try and modify mark-to-market accounting rules that are likely to look similar on both sides of the Atlantic. Lagarde has said previously that plans by the IASB to ease the impact of the credit crunch on banks would make their situation worse. (Reuters, Oct. 14)

CHINA – MAJOR BANK LOANS SLOW AS REGULATOR HITS BRAKES

A steeper-than-expected decling in lending by China’s four largest banks in September a fresh sign that the banking regulator had increased efforts to restrain a recent lending spree, the South China Morning Post reported. The newspaper, citing Caijing magazine, said Industrial and Commercial Bank of China, Bank of China, China Construction Bank Corp and Agricultural Bank of China - lent 110 billion yuan (HK$124.9 billion) last month, the lowest monthly total this year. The China Banking Regulatory Commission in July stepped in to control a lending spree, and has require more frequent reports about the pace of lending. (South China Morning Post, Oct. 13)

UK – UK HALTS BUSINESS WITH IRAN FIRMS ON NUCLEAR FEARS

Britain froze business ties with an Iranian bank and state-run shipping firm, citing fears that they were involved in helping the Islamic Republic to develop nuclear weapons. The freeze targets Bank Mellat and Islamic Republic of Iran Shipping Lines, both of which have previously faced sanctions from the United States. The U.S. Treasury welcomed the action, calling it a step forward in protecting the financial system. Making an order under counter-terrorism laws rather than U.N. sanctions, Britain said it was convinced that Iran's disputed nuclear programme was a threat to its security. (Reuters, Oct. 10)

US – BANK OF AMERICA AGREES TO GIVE U.S. MORE DETAILS ON MERRILL

Bank of America Corp may be ready to settle with U.S. regulators after fighting with them over how much it disclosed to investors as it was buying Merrill Lynch & Co Inc. The largest U.S. bank agreed to waive its attorney-client privilege protecting the names of those who made decisions on the acquisition, including to withhold information from shareholders on Merrill's $15.8 billion fourth-quarter loss and bonuses paid to employees. The agreement is a breakthrough for federal regulators, lawmakers and New York Attorney General Andrew Cuomo, who are all separately investigating why Bank of America did not disclose details about losses at the investment bank and brokerage before the Jan. 1 acquisition. (Reuters, Oct. 13)

JAPAN - JAPAN REGULATOR INVESTIGATES BNP PARIBAS - NEWSPAPER

Japan's securities regulator is probing allegations of market manipulation in share trading by BNP Paribas, the Asahi newspaper reported. An official at the Securities and Exchange Surveillance Commission told Reuters it had been inspecting BNP Paribas since March, but declined further comment. The Asahi, without quoting sources, said BNP Paribas Securities (Japan) Ltd may face a suspension of operations. The newspaper quoted market sources as saying the case involved allegations of improper trading in shares in mobile phone company Softbank Corp. BNP Paribas spokesman Daniel Boyd said the bank had received no official notification of a probe and declined further comment. (Reuters, Oct. 15)

GERMANY - HYPO REAL ESTATE IS NATIONALISED WITH SQUEEZE OUT

The German government completed the nationalisation of financially troubled lender Hypo Real Estate on Tuesday, setting the stage for a prolonged legal battle with minority shareholders, including J.C. Flowers. GLOBAL REGULATORY BRIEFING OCT. 15

A Munich court approved the squeeze-out of minority shareholders, Hypo Real Estate said, which allowed for the German government's rescue fund SoFFin to get 100 percent of the real estate lender. Against the wishes of a raft of minority shareholders, the proposal to squeeze them out was passed at an extraordinary general meeting on Oct. 5, fixing an offer of 1.30 euros a share. (Reuters, Oct. 13)

BRAZIL - BRAZIL'S VALE RAISES INVESTMENT UNDER GOVERNMENT PRESSURE

Mining giant Vale announced billions of dollars in new domestic investments after months of government criticism that the company was not doing enough for Brazil's economy. Vale, the world's largest iron ore producer, said it would invest 9.5 billion reais, or $5.6 billion, by 2015 to boost production capacity of iron projects in the mining state of Minas Gerais. The move followed repeated attacks by President Luiz Inacio Lula da Silva that Vale was not investing enough in Brazil, highlighting a falling out between Lula and the leadership of a company he once lauded as a model for the country. (Reuters, Oct. 14)

CHINA - CHINA TO STANDARDISE OPEN-END MUTUAL FUNDS FEES – REPORT

China plans to standardize fees for open-end mutual funds to discourage short-term trading, Dow Jones reported, citing the China Securities Regulatory Commission. It said the commission also plans in draft rules to ban transaction-based rewards fund sales staff. The rules would restrict mutual fund managers to charging investors no more than 5 percent on purchases on redemptions. They would also have to charge extra to investors who redeem funds held for less minimum periods. (Dow Jones, Oct. 14)

(IV) TAX

US – U.S. OFFSHORE TAX AMNESTY DRAWS 7,500 EVADERS, CRACKDOWN EXPANDS

About 7,500 wealthy Americans have volunteered information about unreported income hidden in overseas accounts ahead of this week’s deadline for a U.S. government tax amnesty program, U.S. Internal Revenue Service Commissioner Doug Shulman said. The IRS is expanding its offshore tax crackdown and will open new criminal offices in Beijing, Sydney and Panama, Shulman said. (Reuters, Oct. 14)

US – OBAMA COMMITTED TO ENDING INTERNATIONAL CORPORATE TAX “LOOPHOLES”

President Barack Obama remains committed to reforming international corporate taxation to end "unfair loopholes," a White House spokeswoman said. The comment was in response to a front-page article in The Wall Street Journal that said the Obama administration, after complaints from businesses, has shelved a plan to raise more than $200 billion in new taxes on multinational companies. (Reuters, Oct. 13)

CAYMAN ISLANDS - CAYMAN ISLANDS WOO FRENCH BUSINESS WITH TAX ACCORD

The Cayman Islands has signed a tax information agreement with France that it said it hoped would attract French financial institutions and companies. It was the 13th bilateral Tax Information Exchange Agreement (TIEA) signed by the Cayman Islands, which has moved quickly in recent months to update its tax information

relations at a time when France and other industrialized states are cracking down on offshore centers perceived as tax havens. (Reuters, Oct. 14)

(V) TRADE & CROSSBORDER

CHINA - US TREASURY DECLINES TO CALL CHINA A FOREX MANIPULATOR

The U.S. Treasury Department declined to label China a currency manipulator but repeated that it considers China's yuan undervalued and will keep trying to persuade Beijing to let it rise. In a semiannual report to Congress on currency practices of key trade partners, Treasury said none of its trade partners were manipulating their currency rates for trade advantage. Treasury said that China, which pumped stimulus into its economy during the recession, had played an important role in anchoring the global economy this year. But it also said that lack of flexibility in the exchange rate for the yuan might unwind some of that progress as stimulus is withdrawn and overseas demand for Chinese-made goods returns. Earlier, China’s currency regulator said a re-emergence of pressure for a sharp rise in the yuan is unlikely in the near term, and that a view had weakened in the markets that the yuan was a one-way bet to rise against the dollar. (Reuters, Oct. 14-15)

JAPAN - JAPAN'S FUJII DEFENDS RIGHT TO SPEAK OUT ON FOREX

Japanese Finance Minister Hirohisa Fujii defended his right to speak out on currencies on Thursday while dismissing the view that he favours a stronger yen. The yen jumped against the dollar last month after Fujii, on the day he became minister, said a strong yen had advantages for the nation's economy and he opposed intervention in the market if currency moves were gradual. After turbulence in currency markets following his remarks last month, Fujii has sought to tone down his comments. He said he never explicitly called for a stronger currency and that the Finance Ministry could intervene if foreign exchange moves got out of hand. He has also said Americans have a sense of crisis about a weak dollar. He said it is the role of finance ministers to speak out on currency policy, and those who did not do so in the past were in error. (Reuters, Oct. 15)

THAILAND - THAI CENTRAL BANK SAYS TO ACT ON FOREX, DIVERSIFY RESERVES

Thailand's central bank signalled it would intervene further to curb gains in the baht and said it was diversifying its foreign reserves after weeks of buying U.S. dollars. The comments follow a recent flurry of intervention in foreign exchange markets by Asian central banks -- South Korea, Taiwan, the Philippines and Thailand -- as their currencies appreciate against a broadly weak U.S. dollar. Part of the current pressure on the currencies is from portfolio flows as investors look to put money back into emerging markets in the belief that the worst of the global financial crisis is over. Bank of Thailand Governor Tarisa Watanagase said the baht was moving in line with other Asian currencies and there was no need for a repeat of the 2006 capital controls that were imposed by an army-appointed government to try to curb a rise in the currency. (Reuters, Oct. 12)

CHINA – CHINA TO PERMIT PARTNERSHIPS TO BUY STOCKS – DRAFT RULES

China will allow partnership enterprises to invest in stocks as part of efforts to expand its capital markets, according to draft rules published by the securities regulator. It was not clear which companies would be classified as eligible partnerships, but the China Securities Regulatory Commission (CSRC) said that foreign- invested venture capital firms could be included. Only domestic residents, Chinese corporations with legal personalities and foreign firms allocated strict quotas are currently permitted to invest in China's stock markets.

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The CSRC said the new rule was aimed at diversifying the country's base of investors and at attracting more financing for technological innovation. (Reuters, Oct. 13)

ASIA – SOUTH KOREA SAYS AGREES WITH CHINA TO CONSIDER FREE-TRADE DEAL

South Korea and China agreed to consider a free trade deal and the two neighbours expect bilateral trade to double by 2013 to $300 billion, Seoul's government said. The announcement came as leaders of China, Japan and South Korea met and vowed to work together for closer regional economic integration, aiming eventually for a bloc something like the European Union (EU). (Reuters, Oct. 10)

RUSSIA - JOINT BID DELAYS RUSSIAN WTO ENTRY SIGNIFICANTLY, NEGOTIATOR SAYS

Russia's bid to join the World Trade Organisation (WTO) simultaneously with Belarus and Kazakhstan is likely to delay Moscow's entry significantly, the senior official steering the negotiations said. Stefan Johannesson, who chairs the global trade body's working group on Russian membership, told Reuters he would meet Russian, Belarussian and Kazakh negotiators at the WTO in Geneva on Thursday to "clarify what is going on" with Moscow's stalled bid. Prime Minister Vladimir Putin announced Russia's withdrawal of its unilateral WTO accession bid in June in favour of a joint effort with his two ex-Soviet neighbours. Many WTO members have poured cold water on the plan and WTO chief Pascal Lamy has questioned whether a joint bid complies with the body's rules. Russian officials have indicated the three countries may ditch the plan to join as a customs union, and instead accede simultaneously on an individual basis. (Reuters, Oct. 14)

US - U.S. TRADE DEALS COULD LANGUISH FOR ANOTHER YEAR

It could be more than a year before U.S. free trade agreements with South Korea, Panama and Colombia come up for a vote in Congress, a Democratic supporter of the pacts said. Rep. Joseph Crowley told Reuters that it was "not clear yet" whether the White House will send the agreements to Congress before the November 2010 congressional elections. The administration of former President George W. Bush negotiated all three pacts but was unable to persuade the Democratic-controlled Congress to approve them. President Barack Obama sided with labor and other opponents of the pacts as a candidate. Since taking office, he has promised to work with the three countries and Congress to win approval of the pacts but his administration has spent most of its political capital and energy on domestic initiatives. (Reuters, Oct. 14)

CHINA - CHINA BANS FOREIGN INVESTMENT IN ONLINE GAMES INDUSTRY

China has banned foreign investment into its lucrative online games industry in an effort to tighten control over its virtual worlds. China's video game industry regulator the General Administration of Press and Publication (GAPP) and copyright watchdog issued a circular prohibiting foreign investment in domestic online gaming operations through joint ventures, wholly owned enterprises and cooperatives. The new directive also disallows foreign firms from indirectly influencing Chinese gaming firms through agreements or technology support. (Reuters, Oct. 12)

MEXICO - MEXICAN SENATORS TO SEEK RULING IN CITIGROUP OWNERSHIP DEBATE

Mexican senators are set to ask the Supreme Court to rule on whether a Citigroup subsidiary in the country is breaking the law by being partly owned by the U.S. government, a Senate source said. Senators are preparing to send to the top court a resolution on the issue that was approved this week, the source said.

The U.S. government's 34 percent stake in Citigroup acquired during the global credit crisis has raised legal questions about its Mexican unit, Banamex, because foreign governments are generally not allowed to own banks in Mexico. Some senators say Citigroup should be forced to sell Banamex, which it bought in in 2001 for $12.5 billion. (Reuters, Oct. 14)

GLOBAL - NEW DATA TECHNOLOGY TRADE RULES NEEDED -MICROSOFT

Countries need to forge new trade rules governing the movement of electronic data across borders as the world becomes increasingly connected, Brad Smith, Microsoft senior vice president and general counsel, said. He told a global services conference in Washington that as more software services are provided over the Internet, people will calling on computers around the world. But there is a patchwork of laws causing a “quagmire for information providers.” Former U.S. Trade Representative Charlene Barshefsky, in a speech to the same group a day earlier, suggested the creation of a new Internet trade agreement to foster the delivery of software services across borders. (Reuters, Oct. 14)

US - REPUBLICANS URGE OBAMA TO ROLL BACK "BUY AMERICAN" PLANK IN STIMULUS

Republicans urged President Barack Obama to roll back a "Buy American" provision of this year's $787 billion economic stimulus package, which they said was delaying public works projects and costing American jobs. Representative Kevin Brady urged the White House to exempt state, county and city governments from the Buy American provision, which require all public-works projects funded by the stimulus bill to use only U.S.-made goods. A group of Republicans said they were seeking to call attention to this issue because Democratic leaders have refused to address it. A spokesman for the White House budge office said it will be at least a few more weeks before the office finishes drafting final rules for the Buy American provision. (Reuters, Oct. 8)

(VI) EXCHANGES & TRADING INFRASTRUCTURE

US – SECURITIES REGULATOR TO CONSIDER U.S. RULES FOR DARK POOLS OCT. 21

U.S. regulators will consider next Wednesday proposals to shed more light on dark pool stock trading venues, the Securities and Exchange Commission said. The SEC, whose Chairman Mary Shapiro has raised concerns that the alternative trading venues could inequitably convey valuable information, said it will hold an open meeting Oct. 21 to consider amending the display obligations of such venues among other proposals. (Reuters, Oct. 14)

US - FAST TRADERS PUSH ALTERNATIVE US RISK OVERSIGHT PLAN

A handful of companies, including high-frequency traders, have asked the U.S. stock clearinghouse to act as a market-wide monitor, to guard against the risk of a malfunctioning computer program spreading chaos. The Depository Trust & Clearing Corp, which clears virtually all U.S. stock trading, said it has been approached in recent months to consider enforcing position limits on all market participants. Both authorities and traders are concerned that a computer algorithm used to rapidly trade stocks could go haywire and spark chaos by building a massive position -- setting off an adverse chain reaction in the blink of an eye. The idea of involving DTCC has been presented as an alternative to proposals to crack down on direct market access, sometimes called DMA or "naked access." DMA is a controversial practice where high-frequency trading firms and others use a brokerage's identification to submit orders directly to capital markets. The monitor idea is still in a very early stage of thinking but is consistent with DTCC's mission, Susan Cosgrove, the head of DTCC equities clearance and settlement, told Reuters. (Reuters, Oct. 9)

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SOUTH KOREA – KOREA EXCHANGE HEAD RESIGNS, CITES PENDING END OF MONOPOLY

Korea Exchange chairman Lee Jung-hwan resigned after frequent clashes with the current government after being appointed in March 2008 to a three-year term, Korean media reported. The Korea Herald said Lee had regularly demanded that exchange, a public agency and South Korea’s sole bourse operator, be freed of state control. It said in his resignation he cited a pending bill that would allow for multiple stock exchanges and effectively end the Korea Exchange’s quasi-governmental status, allowing him to make good on a pledge to quit if his conditions were met. (Korea Herald, Korea Economic Daily, Oct. 14)

(VII) FUNDS MANAGEMENT & PRIVATE EQUITY

US – CALIFORNIA PENSION-FUND GIANT LAUNCHES PROBE OF PLACEMENT AGENT FEES

Calpers, the biggest U.S. public pension fund, is probing fees paid by outside money managers to win its business, expanding a review of "pay-to-play" schemes at public retirement systems that has spread across the nation. The $200 billion fund said in a statement its probe centers around payments of more than $50 million that outside managers made over a five-year period to ARVCO Financial Ventures LLC, a firm headed by former Calpers board member Al Villalobos. Calpers, the California Public Employees' Retirement System, said it has notified the U.S. Securities and Exchange Commission and California's top law enforcement officer of its probe and will work with both as needed. California Attorney General Jerry Brown is pursuing his own review of middlemen used by investment managers seeking public pension contracts. At issue for Calpers is the role Villalobos' firm played as a "placement agent" for investment institutions seeking the fund's business. (Reuters, Oct. 14)

(VIII) COMMODITIES & ENERGY

CHINA / RUSSIA CHINA, RUSSIA BOLSTER TIES WITH GAS, TRADE DEALS

Russia and China bolstered an increasingly imbalanced relationship when Russian Prime Minister Vladimir Putin ushered through a tentative gas supply agreement and deals worth $3.5 billion. The centerpiece of Putin's talks with Chinese Premier Wen Jiabao, which focused on trade and energy, was a preliminary agreement on Russian state-run gas giant Gazprom supplying China National Petroleum Corp. Gazprom Chief Executive Alexei Miller said the deal could open the way to Russia supplying 70 billion cubic metres per year to China from Siberia and the Russian Far East. This could make China the biggest buyer of Russia's natural gas, nearly double Germany’s purchases. Gas deliveries could begin by 2015, and pricing issues could be decided at the start of 2010, a Russian official said. However, the new pact has not resolved disagreements over pricing and conditions that have blocked concrete progress in three years of work on an agreement. (Reuters, Oct. 13)

TAIWAN - TAIWAN TO STUDY WHETHER TO INCREASE GOLD IN RESERVES

Taiwan's central bank is studying whether to increase the amount of gold in its forex reserves, Asia's third largest, Central Bank Governor Perng Fai-nan said. Taiwan's foreign exchange reserves, which rank behind China and Japan in Asia, rose to a record high of $332.2 billion at the end of September, mainly due to the euro and yen appreciating against the U.S. dollar. The figure that the central bank announced does not include gold. In October 2006, the central bank said the island had $10.1 billion of gold in its reserves. (Reuters, Oct. 14) This Briefing is produced by Reuters News service. Contact [email protected] for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited. GLOBAL REGULATORY BRIEFING OCT. 15

(IX) ISLAMIC FINANCE

MALAYSIA – SUKUK PLAN BY MALAYSIA’S PAAB SIGNALS MARKET MAY BE THAWING

Malaysian water firm Pengurusan Aset Air will sell 20 billion ringgit ($5.85 billion) of sharia bonds, in what would be the country's biggest corporate Islamic fund-raising, suggesting the frozen sukuk market is thawing. The company will use around 10 percent of the proceeds to refinance existing debt, and the rest for working capital, Chief Executive Officer Ahmad Faizal Abdul Rahman was quoted as saying by New Straits Times paper. Lum Choong Kuan, head of fixed income research at Malaysia's No.2 bank CIMB said Islamic bond issuers are returning to the market after the credit crisis. Strong demand for recent Islamic bonds issued by the Indonesian and Bahrain governments and Malaysian state oil firm Petronas is encouraging some issuers to come to the market, bankers have said. (Reuters, Oct. 8)

(X) STATE ENTERPRISES AND WEALTH FUNDS

GERMANY - NEW GERMAN COALITION AIMS TO REVIEW GOVERNMENT STAKES - DOCUMENT

German Chancellor Angela Merkel's conservatives and the pro-business Free Democrats (FDP) have agreed that they want to review all company holdings owned by the state, documents seen by Reuters showed. The review was raised in a draft document on economic policy drawn up by a working group as part of talks by Merkel's Christian Democrats (CDU) and its Bavarian sister party, the Christian Social Union (CSU), on forming a centre-right coalition government with the FDP. The working-group proposals must be approved by a wide group of party representatives. (Reuters, Oct. 14)

CHINA – CHINA DEVELOPMENT BANK MAY ACQUIRE STOCKFLY SECURITIES – REPORT

State-controlled China Development Bank (CDB) may acquire Stockfly Securities in a bid to diversify from its major-infrastructure base, China Daily reported, citing local media. The report said shareholders in Stockfly, affiliated with China Aviation Industry Corp, posted statements that the brokerage planned to sell its 100 percent stake to "a major State-owned commercial lender with net assets not less than 300 billion yuan ($38.71 billion)", for 1.15 billion yuan. The report said CDB was seeking to become a commercial lender and was following other major domestic banks in building up its own investment banking platform. (China Daily, Oct. 15)

CHINA – CHINA WEALTH FUND TO KEEP BUYING SHARES IN MAJOR CHINESE BANKS

China's $300 billion sovereign wealth fund China Investment Corp, will continue buying shares in the country's three largest banks over the next year to reassure investors and stabilise the stock market, the Wall Street Journal reported. (Wall Street Journal, Oct. 13)

GLOBAL - EXCESSIVE TRANSPARENCY PUSH FOR SOVEREIGN FUNDS HARMFUL - CHINA

Sovereign wealth funds from around the world agreed to promote transparency in their operations, but the head of China Investment Corp said “excessive” disclosure, such quarterly reports, would do more harm than good. The 23-nation International Forum of Sovereign Wealth Funds agreed after their inaugural meeting in Baku to further promote a voluntary code of practices adopted last year, including the public disclosure of relevant

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information. However, CIC board chairman and forum deputy Jin Liqun said on the sidelines of the meeting that quarterly disclosure, “encourages managers to do reckless things.” Jin said pressure for short-term returns prevented the CIC, which published its first annual report last August, from taking advantage of financial dislocations and attractive valuations late last year. The 20-nation forum said in a communiqué that nations where they invest also needed more transparency in investment regulations, as well as systems that ensured against discrimination and protectionism. (Reuters, Oct. 9)

MEDIA & PRESS FREEDOM

CHINA - CHINA’S HU, GLOBAL MEDIA, DIFFER AT BEIJING FORUM

Media baron Rupert Murdoch called on China to follow other Asian nations in opening its media market, in an unprecedented forum where international media leaders and Chinese President Hu Jintao offered contrasting views of the news media’s role in society. The Hollywood reporter quoted Hu as telling the forum, organized by state-run Xinhua News Agency, that news organizations should strive to promote peace and development. Murdoch urged China to “compete in the marketplace of ideas,” Malaysia’s New Straits Times said. ThomsonReuters Editor-in-Chief David Schlesinger called for "openness, transparency and accountability.” These, he said, "may lead to momentary discomfort and sometimes embarrassment" but are "a precondition to a truly healthy, stable and successful system," the newspaper said. Murdoch said that within Asia, his News Corp had experienced a much better time in India than in China. He urged China to take advantage of the Internet and warned that it must open its door to digital media or lose opportunities and potential, the Hollywood Reporter said (Reuters, Hollywood Reporter, Oct. 9, New Straits Times, Oct. 15)

CHINA - BATTLE FOR CONTROL SHAKES CHINA'S CAIJING MAGAZINE

The future of one of China's best-selling investigative magazines is at stake in an increasingly public battle for control that pits its envelope-pushing editor against her financial backers. Hu Shuli, known for her influential documentation of backroom deals and economic policymaking, is trying to wrest more control over the popular business magazine Caijing. She hopes to expand into online ventures and a news wire-like service. But her backers are trying to keep the reporting focused on purely financial topics and avoid straying into politically sensitive areas. Several employees on the business side resigned late last month, and rumours that editorial staff are poised to go have raised the stakes. If negotiations fail, sources and Chinese media say several potential backers are waiting in the wings to finance a new publication headed by Hu. (Reuters, Oct. 13)

UK – TWITTER CAMPAIGN FORCES RETREAT ON UK MEDIA GAG ORDER

Thousands of Twitter users and bloggers mounting a pitched Internet campaign forced a retreat on a British High Court gag order barring all media discussion of proceedings in Parliament related to a class-action lawsuit, the Financial Times reported. It said the Guardian newspaper proclaimed, in a Twitter posting, “a great victory for free speech” after lawyers for commodities trader Trafigura agreed to relaxing the order so the media could report the parliamentary question. Trafigura was involved in the UK’s biggest class-action suit after one of its ships, the Probo Koala, offloaded toxic “slops” in Abidjan in 2006 to a local company which dumped it in open-air sites. It had repeatedly used libel lawyers to combat media criticism of the company and the civil proceedings. MPs had called for an This Briefing is produced by Reuters News service. Contact [email protected] for more information, or to be added to the distribution list. © Thomson Reuters 2009. All rights reserved. This information is being distributed free of charge. Thomson Reuters is not liable for any inaccuracies or other errors or delay in the information or for any reliance on it. This Global Regulatory Briefing contains headlines and summaries only and therefore you should refer for more detail or verification to the original sources. Republication or redissemination of this information without Thomson Reuters prior written consent is prohibited. GLOBAL REGULATORY BRIEFING OCT. 15

emergency debate in the Commons amid outrage at Westminster over an apparent threat to parliamentary privilege. (Financial Times, Oct. 13)

ARGENTINA - ARGENTINE SENATE PASSES MEDIA REFORM BILL

Argentina's Senate passed President Cristina Fernandez's broadcast regulation overhaul to cap the number of licenses controlled by a media giants. Fernandez she says the revamp will open the country's airwaves to new players. Critics say it will increase state influence over the media, and called it an attempt to cripple media giant Grupo Clarin, whose media outlets are critical of her unpopular government. Opposition lawmakers said they will seek to revise the bill in December, when new lawmakers will be seated after Fernandez's ruling party lost its congressional majority in June elections. (Reuters, Oct. 10-12)

TURKEY - DOGAN YAYIN SAYS BANK ACCOUNTS FROZEN IN TAX ROW

Turkish media group Dogan Yayin said the bank accounts of some of its units had been placed under injunction, the latest twist in its dispute with the government over a $3.3 billion tax fine. The preliminary injunction applies to its unit Dogan TV Holding and companies it operates, Dogan Yayin said. The case against Dogan Yayin has raised free-press concerns from the European Union, which Turkey hopes to join. In its annual report on enlargement, Brussels suggested Prime Minister Tayyip Erdogan's government might be treating Dogan Yayin unfairly. Dogan Yayin, which controls half of the Turkish media market, has said the fine is in response to its critical news coverage. Erdogan denies the tax dispute is politically motivated. (Reuters, Oct. 15)

TELECOMS & INTERNET

MEXICO - MEXICO BODY RULES TELMEX DOMINANT IN LONG DISTANCE

Mexico's competition regulator said it ruled that fixed-line telephone giant Telmex, controlled by billionaire Carlos Slim, is a dominant player in wholesale services related to long distance, opening the company to the possibility of increased regulation. Telmex, a former government monopoly, controls about 80 percent of Mexico's fixed-line telephone market and is the country's main Internet service provider. In July, the competition regulator ruled that Telmex is dominant in local transit and wholesale leasing of dedicating connections. (Reuters, Oct. 14)

GERMANY - GERMANY GIVES GREEN LIGHT FOR 2010 DIGITAL FREQUENCY AUCTION

Germany's biggest digital frequency auction -- set to generate up to 5 billion euros ($7.4 billion) -- can go ahead next year as planned despite complaints from the European Union and small operators. The advisory council of Germany's telecommunications watchdog agreed the auction could take place in the first half of 2010, said Ulrich Junghanns, head of the council. The auction is part of an effort to speed the rollout of broadband communications and increase coverage, but European Commissioner Viviane Reding has written to Germany's federal network agency citing concerns that the auction could favour larger players. Smaller operators in Germany have asked the regulator to ensure fair access to important frequencies below one gigahertz for all mobile telecoms providers by limiting bidding rights for large players. (Reuters, Oct. 12)

US – U.S. REGULATOR QUESTIONS GOOGLE VOICE AFTER LAWMAKERS SEEK PROBE

The US Federal Communications Commission sent a letter to Google asking about calls blocked by the company’s Google Voice service, the Financial Times reported. The move came after AT&T Inc and U.S.

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lawmakers urged regulators to investigate Google’s ability to block expensive calls to rural areas to slash expenses, marking the latest spat between the Internet giant and AT&T Inc. AT&T Inc, the exclusive U.S. carrier for Apple’s iPhone, has complained that Google has the ability to block calls, which U.S. phone carriers are prohibited from doing. Google has accused Apple of rejecting its voice application. But Apple said it was still studying it because the application alters the iPhone's telephone functionality and user interface. (Reuters, Oct. 8, Financial Times, Oct. 10)

POLAND - POLAND DRAFTS LEGISLATION TO EXPAND BROADBAND

The Polish government aims for a parliamentary vote by November on proposed regulations aimed at helping to meet a goal of universal broadband access by 2013 or 2014, Gazeta Wyborcza reported. The law would require fiber connections to multi-family housing developments by 2010 and set standards for local governments to invest in broadband in commercially unviable areas that are not viable for commercial roll- outs, as well as set a framework for using utility infrastructure to accommodate network equipment. (Gazeta Wyborcza, via IHS Global Insight, Oct. 14)

BRAZIL - BRAZIL PLANS NEW RULES ON BROADBAND SPEEDS

Brazilian regulator is Anatel is looking to tighten broadband rules to require maximum and minimum speeds in service contracts, Telecompaper Americas reported, citing comments by Anatel adviser Emilia Ribeiro to the newspaper O Estado de S. Paulo. The rules, intended to take effect in the first half of 2010, would also set standards for customer service and seek to stimulate competition. (Telecompaper Americas, Oct. 14)

FRANCE - FRANCE MOVES TOWARDS OPENING UP ONLINE GAMBLING

France moved towards ending a state monopoly on online gambling and allowing private companies to offer Internet bets on poker, soccer and horse racing, under a new law approved by the National Assembly. It will still need final approval by the Senate. Under pressure from the European Union, companies and soccer clubs eyeing the multi-billion euro online gaming market, France's government wants the law to be in force in time for the 2010 World Cup in South Africa. For now, the only legal operators of online gambling in France are state-owned PMU for horse racing and the Francaise des Jeux for lotteries and other games. Under the proposed new law, private firms would need to obtain a permit from a newl regulator to set up Web sites offering bets on games of skill such as poker, sports contests and horse racing. (Reuters, Oct. 13)

PEOPLE

CHINA - BANK OF CHINA EXEC TO TAKE UP SENIOR IMF POST - SOURCE

A Bank of China executive will take up a senior post at the International Monetary Fund (IMF), a person with direct knowledge of the situation said on Tuesday, as China seeks more power in the Washington-based agency. Executive Vice President Zhu Min, a former World Bank economist, may first transfer to China's central bank before assuming his IMF role, the person said. Chinese magazine Caijing reported that Zhu will act as vice governor of the People's Bank of China before being appointed Vice President of the IMF. China and some other developing countries have been pushing for more voting power at the IMF. The IMF, meanwhile, needs Beijing's support as the fund embarks on an ambitious reform agenda in the middle of the global financial crisis. (Reuters, Oct. 13)

FRANCE - BANK OF FRANCE'S NOYER TO GET SECOND TERM

Bank of France Governor Christian Noyer will be reappointed to a second mandate when his six-year term ends on Oct. 31, an official in President Nicolas Sarkozy’s office said. Noyer, who is also a governing council member of the European Central Bank, won praise in financial markets and from the government for his handling of the financial crisis, from which French banks emerged relatively unscathed. Sarkozy is also said to be pleased with his crisis management and the reappointment was widely expected after a strong endorsement from Economy Minister Christine Lagarde. (Reuters, Oct. 14)

US - U.S. SENATE CONFIRMS THREE NOMINEES TO FUTURES REGULATOR

The U.S. Senate unanimously confirmed three nominees to the five-member U.S. Commodity Futures Trading Commission. Bart Chilton and fellow CFTC Commissioner Jill Sommers were nominated for another term at CFTC. Scott O'Malia was nominated last month to fill the vacant Republican post at the CFTC. All three said at a Senate Agriculture Committee hearing they backed the Obama administration plan that has called for centralized clearing of over-the-counter derivatives. Congress and the administration agree broad regulation of dealers and products must be part of a reform package. (Reuters, Oct. 9)

US - US TOP COURT TO HEAR APPEAL BY ENRON'S SKILLING

The U.S. Supreme Court said it would hear an appeal by former Enron Corp Chief Executive Jeffrey Skilling of his 2006 felony conviction stemming from the giant energy trader's collapse. The justices agreed to review a U.S. appeals court ruling that upheld Skilling's 19 felony convictions. Skilling's attorneys appealed to the Supreme Court, arguing that the jury was swayed by pretrial publicity and that prosecutors improperly relied on the "honest services" theory, under which employees are bound to provide honest services and not put their interests ahead of those of a company. (Reuters, Oct. 13)

US - LAZARD CEO BRUCE WASSERSTEIN DIES AT 61

Bruce Wasserstein, the legendary Wall Street deal maker identified with an era of no-holds-barred takeover battles, has died at the age of 61. His death leaves major questions about the future direction and leadership of Lazard Ltd., the investment bank he headed. (Reuters, Oct. 14)

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