ILFA 〔2014〕No.247

The Mechanism of

China-South Asia International Finance Opening & Cooperation

Profile

    According to the documents list below :1.《Opinions of the State Council on the support of the Yunnan province to speed up construction of the southwest important bridgehead 》(State Issue 〔2011〕No.11) 、2. 《The people's Government of Yunnan Province on accelerating Kunming regional international financial center construction 》、(Yunnan Government Issue〔2012〕No.146)、3. 《 Scheme of the Guangxi Zhuang Autonomous Region construction along the financial comprehensive reform pilot area in Yunnan Province 》(China Bank Issue〔2013〕No.276)、4.《 The implementation opinions of people's Government of Yunnan province about the construction of the financial comprehensive reform pilot area 》(Yunnan Government Issue〔2013〕No.158)、5. 《 The several opinions on further promoting the healthy development of capital market 》(State Issue 〔2014〕No.17), also in the project of 《The study of International Financial Opening & Cooperation among BCIM Economic Corridor countries 》mention that " hold the conference of Pan Asia financial cooperation , establish the inter-governmental information exchange and negotiation mechanism between financial supervision department , establish the financial information exchange and negotiation mechanism between private sectors . " Thus it can be seen that , establish the comprehensive multi-level financial cooperation mechanism between Yunnan province and neighboring countries are key solution to build up a opening economic system and deepen financial reform in Yunnan . Through the private sector financial cooperation mechanism to provide the service for the inter-governmental financial cooperation mechanism is a better way for the government to implement their goals and let the market play a decisive role in the allocation of resources . 

In 9 / June / 2014 , the Commerce Office of Yunnan Province and Financial Office of People’s Government of Yunnan joint-sponsoring the “ China-South Asia International Finance Opening & BCIM Exchanges Cooperation Summit “ in Kunming , in this successful meeting , Kunming International Logistics & Finance Association (ILFA)and South Asia Federation of Exchange (SAFE) , Dhaka Stock Exchange , Chittagong Stock Exchange, Myanmar Oriental Bank , Lahore Stock Exchange, Bhutan Royal Stock Exchange, Colombo Stock Exchange,  signed up the joint declaration , officially set up the China – South Asia International Finance Opening & Cooperation private sector mechanism .

Ⅰ. Cooperation between the two sides

 A.  China Kunming International Logistics & Finance Association (ILFA)  founded in May 19, 2014 , it’s a NGO jointed-launched by Kunming Opening-Asia Transportation and Logistics Research Institute , Kunming Pan Asia Financial Cooperation Strategy Research Institute , Yunnan Tanjun investment Group , now own 73 members . The purpose of ILFA are " interconnection , openness and cooperation , common progress " , including the departments list below : Institute for Bangladesh Study in Kunming , China , International Logistics Department , International Finance Department , Economic Geography Information Center , International media center,  International public welfare center, overseas Rights Center, strategic consulting service center

, through the international cooperation mechanism to launch the international logistics & finance cooperation in South Asia area ; to financing the connectivity infrastructure construction by the market ; promoting the construction and operation of the international land port

; promote the construction of the free trade zone network ; the secretariat was established in the China Kunming Opening Asia Transportation and Logistics Research Institute .

     B.  SAFE PROFILE

       South Asian Federation of Exchanges (SAFE) is a cooperative platform launched by the bourses in South Asia with a purpose to promote the development and harmonization of the securities markets in the region. SAFE is a not for profit association having Recognized Body status of the South Asian Association for Regional Cooperation (SAARC), and is a network exchange association of the World Federation of Exchanges (WFE). The operations, activities, and the programs of Federation are primarily funded by its member exchanges, while some specific projects get sponsorships from some multilateral donor/development agencies.

SAFE stands to prepare and position its member markets for their orderly integration into the global financial system by enhancing the depth, inter-connectivity, integrity and transparency of its member markets. Since its inception, SAFE has worked to become a focused platform for the representatives of the exchange industry and other capital market related institutions of the Region. Additionally, the Federation has also provided a channel through which the individual stock exchanges continue to find opportunities for bilateral cooperation.

At the time of inception of SAFE, only a handful of exchanges joined the Federation, and until 2005 the Membership strength of the Federation was only 12 stock exchanges. However, after 2005 the Charter of the Federation was expanded to provide membership to other types of regulated & supervised exchanges besides the post trade companies like the depository & clearing institutions. Furthermore, the Federation was also allowed to induct non-regional exchanges as Associate Members besides offering memberships to the other exchange bodies/federations, regulators, corporate credit rating agencies, and other capital market related institutions as Affiliate Members.

Presently, SAFE comprises of thirty four (34) member entities from the SAARC Region (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) as well as from Kazakhstan, Mauritius and UAE; fifteen (15) regional stock & commodity exchanges as Primary Members; six (6) Associate Members comprising of non-regional exchanges, and regional depository & clearing institutions, nine (9) Affiliate Members and four (4) Affiliate Associations.

SAFE was set up in year 2000 under the initiative of Chittagong Stock Exchange, Bangladesh but now operates from its permanent Secretariat at Islamabad, Pakistan. The activities and operations of the Federation are being spearheaded by Mr. Aftab Ahmad Ch, who has been serving as the regular Secretary General of the Federation since 2005 under the appointment by the SAFE's Executive Board. The present Chair of the Federation is held by our elected Chairman Mr. Al Maruf Khan, President Chittagong Stock Exchange (CSE). 

Services offered by SAFE

·        SAFE acts as a forum for promoting mutual cooperation, regulatory alignment, exchange of information and technological linkage to facilitate the process of integration and harmonization of the region's capital market and to accelerate the common economic growth of South Asia. In this perspective, the Federation acts as an industry platform to advocate, suggest and prepare regulatory changes needed for the harmonization of market practices and policies.

·        SAFE stands to promote the investment potential of the region by attracting foreign institutional and portfolio investments into our regional markets. Towards this end, the Federation regularly conducts seminars, events, conferences and roundtables to highlight the investment potential of our individual as well as the regional markets.

·        The Federation engages in the capacity building programs to develop the skills and expertise of the human capital for the effective management of our markets. This is done through various activities and initiatives both independently as well as in association with other domestic, regional and international entities.

·        SAFE works for the adoption of the best consumer/investor protection standards in the region and towards this end, the Federation undertakes regular efforts for the spread of financial knowledge/awareness in the region.

·        SAFE also provides advisory & consulting services regarding financial and capital market issues, matters and projects both within and outside the region. This is done through channelizing the involvement and participation of the regional consultants.

Ⅱ．Mechanism Position

     The position of "  Mechanism of China – South Asia international Finance Opening & Cooperation  " :   the financial cooperation information exchange and negotiation mechanism between China and South Asia countries , provide the cross-border financing and investment route for the financial institution and industries in China and South Asia countries , build up the communication and coordination mechanism for the financial department between China and South Asia countries , provide the service for cross-border regulatory mechanism .

Ⅲ．Function

1.     Push the capital market interconnection and product certification between China and South Asia Countries ;

2.     Set up the platform which serve for the inter-government cooperation mechanisms ;

3.     Set up the financing mechanism which serve for the connectivity infrastructure construction ;

4.     Carry out the joint study with SAFE and other think tanks to push the inter-governmental communication in financial policies , and innovate financial products for international cooperation between China and South Asia countries ;

5.     Provide the individual and industries the facilitation by the  market channel about cross-border investment ;

6.     Set up the cross – border financial information service platform , trade credit service platform , cross – border financial risk prediction and supervision platform to serve for the international exchanges and trade ;

7.     Provide the market channel for the third party clearing and cross- border electric commerce payment system ;

8.     International man power cooperation and development .

Ⅳ．Organization structure

       1 . ILFA and SAFE and the members belong to each other set up the joint committee , under this committee , set up the working group by nation , name the coordinator for the communication between working group and joint committee ;

       2. The working group in each country should including the financial department officer , SEC officer , central bank officer , military or party representatives , exchange officer and research institute representatives .

Ⅴ．The mode of operation

 1. Every year in June ILFA and SAFE will joint-held the International Finance Opening & Cooperation cross Asia and BCIM exchange summit in Kunming , China . as the highest policy decision meeting mechanism , the meeting will summarize the results of cooperation , decide the further cooperation project , reflect the market demand to the government .

 2. Every year in November ILFA and SAFE will joint-held the BCIM EC connectivity forum as a coordination meeting , in this forum , the working group from all South Asia countries and ILFA will exchange the work opinions of all on-going projects and the business opportunities in this regions ;

 3. Carry out project review, government coordination, academic seminars and other activities irregularly .

 4. Carry out the exchange of information, cross-border investment and financing services, financial products joint R & D activities ;

 5. ILFA will be responsible for all the funds raising .

Ⅵ．Support from the government

 1.  " The Mechanism of China –South Asia International Finance Opening & Cooperation  " was supported by the BCIM EC JWG Chinese working group, and was in the BCIM EC early harvest plan .

 2.  " The Mechanism of China –South Asia International Finance Opening & Cooperation  " was supported by the Yunnan Provincial Party Committee and was the key support project of the "open economy system construction leading group office in Yunnan Province "

 3. " The Mechanism of China –South Asia International Finance Opening & Cooperation  "  was supported by the people's Government of Yunnan province , and also the key project of the " Yunnan province border financial comprehensive reform pilot area leading group office "