Capital Money Markets and Other Capital Movements Caroline

Capital & Money Markets and Other Capital Movements Caroline Mehigan – Economist, OECD

Outline • Securities • Deposit Accounts • Operations in Foreign Exchange • Other Operations

Securities: Items IV to VII Securities: - IV: Capital Markets (shares and bonds- original maturity > one yr) List A - V: Operations on Money Markets (original maturity < one yr) List B - VI: Other Negotiable Instruments and Non—Securitised Claims List B - VII: Collective Investment Securities List A Freedom for transactions and transfers: - No discrimination towards foreign securities

Securities: Freedom for which transactions and transfers? -Admission of domestic securities on foreign markets -Introduction & Issue -Private placement & public offer -Residents abroad -Buy & sell On recognised markets as well as through private transactions -Admission of foreign securities on domestic markets -Introduction & Issue -Private placement & public offer -Non-residents in the country -Buy & sell On recognised markets as well as through private transactions

Securities • Operations abroad by securities firms on account of clients. • Investments abroad of financial institutions. For pension funds and insurance, only rules for share of foreign assets. • Currency rules: • In the country: subject to domestic legislation. • Outside the country: according to rules of foreign jurisdiction.

Securities: Liberalisation obligations are qualified: - Transactions and transfers may be required to be channelled through authorised resident agents. - Admission is subject to securities market regulations. - For operations (buy/sell) in the country: - Measures to protect investors are permitted – including regulation of promotional activities – but non-discriminatory. - Securities must be “legally marketable”. - For operations abroad: regulation of promotional activities is permitted.

Reservations in place by adherents # of Members by Reservations: Securities IVCapital Markets VMoney Markets VIMarkets (Other) VIICollecti ve Investm ent 25 20 15 10 5 0 Inflow Outflow 5 10 15 20 25

Item IV: Capital Markets IV - Capital Markets Reservations by Investor Type 30 25 20 Overlap w/ FDI 21 15 10 Institutional Investors 9 Overlap w/ FDI & Others 2 5 Others 2 0 Inflow Outflow

Informative to look at the de facto adjustment in measures over time • Using IMF AREAER data • For 45 countries • 2000 -2015 • Quarterly frequency • Analysed at the granular level of the Codes

Cumulative Measure adjustment: Inflow 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -20 -40 -60 -80 Collective Inv Secs Loosen Collective Inv Secs Tighten Equity Loosen Equity Tighten

Cumulative Measure adjustment: Inflow 60 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -20 -40 -60 -80 Bond_CM Loosen Bond CM Tighten Bond MM Loosen Bond MM Tighten

Cumulative Measure adjustment: Outflow 40 20 0 -20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -40 -60 -80 -100 -120 -140 -160 Collective Inv Secs Loosen Collective Inv Secs Tighten Equity Loosen Equity Tighten

Cumulative Measure adjustment: Outflow 40 20 0 -20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -40 -60 -80 -100 -120 -140 -160 Bond_CM Loosen Bond CM Tighten Bond MM Loosen Bond MM Tighten

XI Deposit Accounts • Subject to authorisation to accept deposits • Operation by non-residents of accounts with resident institutions • In both domestic & foreign currency • Operation by residents of accounts with non-resident institutions • In both domestic & foreign currency • Refers to the capital account transaction, not the underlying service, which is covered by the CLCIO.

XI Deposit Accounts XI - Deposits Reservations by Institution Type 12 10 Insurance Company Only 5 8 6 Insurance Company & Private Pension Funds 4 4 2 Insurance Company & Private Pension Funds & Others 2 Banks 2 0 Inflow Outflow

XII Operations in Foreign Exchange • Absolute standard, non-residents in the country and residents abroad should be able to buy, sell and exchange currencies. • Subject to authorised agent rules • Spot, forward and other FX derivatives • Repatriation requirements are non-conforming

Other Operations • XIII Life insurance • Transfers only, underlying services are covered by CLCIO • XIV Personal Capital Movements • • Family loans Gifts and endowments Dowries Inheritances & Legacies Settlement of debts in their country of origin by immigrants Emigrants’ assets Gaming Savings of non-resident workers

Other Operations • XV Physical Movement of Capital Assets • Non-residents free to move their assets abroad • For residentes only applies to foreign assets • XVI Disposal of non-residente- owned blocked funds • Transfer of blocked funds • Use of blocked funds in the country concerned • Cession of blocked funds between non-residents

Q&A