Regulatory developments during the past few months have been marked by some tightening on foreign exchange derivatives and by the long-awaited regulations on the operation of the National Finance Supervisory Council (NFSC).

In the July 2008 edition of Indochina notes we reported on Decision 34 of the government establishing the NFSC as a type of ‘super-regulator’ with potentially broad powers. It has taken more than a year since the issue of Decision 34 for the implementing regulations on the NFSC to be issued. It now appears clearer that the NFSC will act in an advisory role to the prime minister with little direct authority. In particular, article 12(4) of the implementing regulations on the NFSC (which are dated 18 May 2009) provides that the NFSC’s broad supervisory powers over the operation and licensing of credit institutions are to be exercised on a ‘remote’ basis and ‘ensuring the principle of not changing the functions and powers of specialized branch State administrative bodies’.  

Also noteworthy is the fact that the NFSC has been charged with the duty to ‘analyse, make forecasts and provide warnings on the safety levels of the financial system and on the level of risks applicable to the national financial market and to propose solutions for promptly dealing with the same’ – something that the financial regulators of almost every G7 economy have conspicuously failed to do in recent years.