The Code of Liberalisation of Current Invisible
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The Code of Liberalisation of Current Invisible Operations: Financial Services Etienne Lepers Economist, OECD Outline The CLCIO and the General Agreement on Trade in Services (GATS) The CLCIO and cross-border trade in financial services
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The Code of Liberalisation of Current Invisible Operations: Financial Services
Etienne Lepers– Economist, OECD<br>
Etienne Lepers– Economist, OECD<br>
02
Outline The CLCIO and the General Agreement on Trade in Services (GATS)
The CLCIO and cross-border trade in financial services Insurance and Pensions
Insurance and Private Pensions
Banking and Financial Services
Country experiences on regulating and supervising bank branches<br>
The CLCIO and cross-border trade in financial services Insurance and Pensions
Insurance and Private Pensions
Banking and Financial Services
Country experiences on regulating and supervising bank branches<br>
03
Liberalisation list for CLCIO Business and Industry
Foreign trade
Transport
Insurance and private pensions
Banking and financial services
Income from capital
Travel and tourism
Films
Personal income and expenditure
Public income and expenditure
General (Professional Services, …)<br>
Foreign trade
Transport
Insurance and private pensions
Banking and financial services
Income from capital
Travel and tourism
Films
Personal income and expenditure
Public income and expenditure
General (Professional Services, …)<br>
04
The CLCIO & the General Agreement on Trade in Services All OECD members are also members of the WTO
GATS entered into force in 1995
Different but compatible obligations with GATS<br>
GATS entered into force in 1995
Different but compatible obligations with GATS<br>
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OECD Codes of Liberalisation: Invisible Operations & GATS<br>
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OECD Codes of Liberalisation: Invisible Operations & GATS<br>
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The CLCIO and cross-border trade in financial services - Insurance and Pensions<br>
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Financial Services Insurance & pensions CLCIO liberalisation list
Business and Industry
Foreign trade
Transport
Insurance and private pensions
Banking and financial services
Income from capital
Travel and tourism
Films
Personal income and expenditure
Public income and expenditure
L. General CLCM liberalisation list
Item I/A Establishment (subsidiaries and branches)
Portfolio restrictions on financial institutions
Some specific provisions<br>
Business and Industry
Foreign trade
Transport
Insurance and private pensions
Banking and financial services
Income from capital
Travel and tourism
Films
Personal income and expenditure
Public income and expenditure
L. General CLCM liberalisation list
Item I/A Establishment (subsidiaries and branches)
Portfolio restrictions on financial institutions
Some specific provisions<br>
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D. Insurance and private pensions Cross-border
Branches
D/1. Social security and social insurance.
D/2. Insurance relating to goods in international trade.
D/3. Life assurance.
D/4. All other insurance.
D/5. Reinsurance and retrocession.
D/6. Conditions for establishment and operation of branches and agencies of foreign insurers.
D/7. Entities providing other insurance services
D/8. Private pensions<br>
Branches
D/1. Social security and social insurance.
D/2. Insurance relating to goods in international trade.
D/3. Life assurance.
D/4. All other insurance.
D/5. Reinsurance and retrocession.
D/6. Conditions for establishment and operation of branches and agencies of foreign insurers.
D/7. Entities providing other insurance services
D/8. Private pensions<br>
10
D. Insurance and private pensions “Prudential considerations
Members may take regulatory measures in the field of insurance and pensions, including the regulation of the promotion, in order to protect the interests of policyholders and beneficiaries, provided those measures do not discriminate against non-resident providers of such services.”<br>
Members may take regulatory measures in the field of insurance and pensions, including the regulation of the promotion, in order to protect the interests of policyholders and beneficiaries, provided those measures do not discriminate against non-resident providers of such services.”<br>
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D. Insurance and private pensions Liberalisation list
D/1. Social security and social insurance.
Transfers and payments only
Services linked to public pension schemes but provided by the private sector are covered by:
D/8 Private pensions<br>
D/1. Social security and social insurance.
Transfers and payments only
Services linked to public pension schemes but provided by the private sector are covered by:
D/8 Private pensions<br>
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Detailed provisions for items D2 to D8 D/2. Insurance relating to goods in international trade.
Cross-border transfers and transactions
For freight and for all means of transport (railway, road, ships, aircraft), also satellites.
D/3. Life assurance.
Cross-border transfers and transactions
Includes pension products offered by insurance companies.
Tax treatment of premiums paid.<br>
Cross-border transfers and transactions
For freight and for all means of transport (railway, road, ships, aircraft), also satellites.
D/3. Life assurance.
Cross-border transfers and transactions
Includes pension products offered by insurance companies.
Tax treatment of premiums paid.<br>
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D. Insurance and private pensions D/4 Other Insurance (other than life)
Group & mandatory insurance not covered
Cross-border transfers and transactions
Tax treatment of premiums paid
D/5 Reinsurance and retrocession
Cross-border transfers and transactions
Settlement of balances<br>
Group & mandatory insurance not covered
Cross-border transfers and transactions
Tax treatment of premiums paid
D/5 Reinsurance and retrocession
Cross-border transfers and transactions
Settlement of balances<br>
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D/6. Conditions for establishment of branches and agencies
Transfers between head office & branches and agencies Equivalent treatment
Financial guarantees
Controlled investments (not more burdensome) Authorisation procedures
Membership in associations
Transfers D. Insurance and private pensions<br>
Transfers between head office & branches and agencies Equivalent treatment
Financial guarantees
Controlled investments (not more burdensome) Authorisation procedures
Membership in associations
Transfers D. Insurance and private pensions<br>
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D. Insurance and private pensions D/7 Other Insurance Services
Intermediation services, auxiliary services (consultancy, actuarial, risk assessment and claim settlement) and representation services
Cross-border transfers and transactions
Establishment: representatives; representative offices (to promote cross-border services); branches and agencies to offer services covered under D/7.
D/8 Private pensions
Cross-border transfers and transactions
Establishment by means of branches
Tax treatment of contributions paid<br>
Intermediation services, auxiliary services (consultancy, actuarial, risk assessment and claim settlement) and representation services
Cross-border transfers and transactions
Establishment: representatives; representative offices (to promote cross-border services); branches and agencies to offer services covered under D/7.
D/8 Private pensions
Cross-border transfers and transactions
Establishment by means of branches
Tax treatment of contributions paid<br>
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E. Banking and Financial Services CLCM liberalisation list
Item I: Direct Investment
FDI in banking and financial services (Inward & outward)
Establishment by means of branches (see also CLCIO)
Items I to XII:
Investments or borrowing abroad of financial institutions.
Currency rules:
In the country: subject to domestic legislation.
Outside the country: according to rules of foreign jurisdiction.<br>
Item I: Direct Investment
FDI in banking and financial services (Inward & outward)
Establishment by means of branches (see also CLCIO)
Items I to XII:
Investments or borrowing abroad of financial institutions.
Currency rules:
In the country: subject to domestic legislation.
Outside the country: according to rules of foreign jurisdiction.<br>
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E. Banking and financial services Cross-border
E/1. Payment services.
E/2. Banking and investment services
E/3. Settlement, clearing and custodial and depository services
E/4. Asset management.
E/5. Advisory and agency services.
E/6. Fees, commissions and other charges.
Establishment
E/7. Conditions for establishment and operation of branches, agencies, etc. of non-resident investors in the banking and financial services sector.<br>
E/1. Payment services.
E/2. Banking and investment services
E/3. Settlement, clearing and custodial and depository services
E/4. Asset management.
E/5. Advisory and agency services.
E/6. Fees, commissions and other charges.
Establishment
E/7. Conditions for establishment and operation of branches, agencies, etc. of non-resident investors in the banking and financial services sector.<br>
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E. Banking and financial services “General remarks:
1. Regarding operations in the country concerned, Members may take measures for the maintenance of fair and orderly markets and sound institutions and for the protection of investors or other users of banking or financial services, provided those measures do not discriminate against non-resident providers of such services.
2. Regarding operations abroad, Members may regulate on their territory the promotional activities of non-resident providers of such services.
3. Transactions and transfers concerning capital movements in connection with operations covered by Section E of this Code are governed by the Code of Liberalisation of Capital Movements.”<br>
1. Regarding operations in the country concerned, Members may take measures for the maintenance of fair and orderly markets and sound institutions and for the protection of investors or other users of banking or financial services, provided those measures do not discriminate against non-resident providers of such services.
2. Regarding operations abroad, Members may regulate on their territory the promotional activities of non-resident providers of such services.
3. Transactions and transfers concerning capital movements in connection with operations covered by Section E of this Code are governed by the Code of Liberalisation of Capital Movements.”<br>
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E. Banking and financial services E/1. Payment services.
Payment instruments (issuance and use of cheques, travellers cheques, cash cards, …)
Fund transfer services
Remarks in Users’ Guide:
Countries may maintain authorised resident agents requirements
The obligation to liberalise foreign payments services under Item E/1 only applies within the scope of permitted capital operations. Such operations, in particular the freedom to operate deposit accounts with non-resident banks, may be subject to reservations under the Capital Movements Code.<br>
Payment instruments (issuance and use of cheques, travellers cheques, cash cards, …)
Fund transfer services
Remarks in Users’ Guide:
Countries may maintain authorised resident agents requirements
The obligation to liberalise foreign payments services under Item E/1 only applies within the scope of permitted capital operations. Such operations, in particular the freedom to operate deposit accounts with non-resident banks, may be subject to reservations under the Capital Movements Code.<br>
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E. Banking and financial services E/2. Banking and investment services
Underwriting
Broker/dealer services
Financial market information, communications and execution systems
Remarks in Users’ Guide:
Obligations on financial market information, communications and execution systems apply only to the access to such systems, not to their provision.<br>
Underwriting
Broker/dealer services
Financial market information, communications and execution systems
Remarks in Users’ Guide:
Obligations on financial market information, communications and execution systems apply only to the access to such systems, not to their provision.<br>
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E. Banking and financial services E/3. Settlement, clearing and custodial and depository services
Remark: Members may require that non-residents participate in a domestic settlement and clearing system only through a branch or subsidiary established in the territory of the Member concerned.
Remarks in Users’ Guide:
Obligations on settlement and clearing systems apply only to the access to such systems, not to their provision.
There are no obligations with respect to the provision of depository systems, either by non-residents in the country concerned or by residents abroad. Cross-border access, both by non-residents in the country concerned and by residents abroad to depository systems, shall be free.<br>
Remark: Members may require that non-residents participate in a domestic settlement and clearing system only through a branch or subsidiary established in the territory of the Member concerned.
Remarks in Users’ Guide:
Obligations on settlement and clearing systems apply only to the access to such systems, not to their provision.
There are no obligations with respect to the provision of depository systems, either by non-residents in the country concerned or by residents abroad. Cross-border access, both by non-residents in the country concerned and by residents abroad to depository systems, shall be free.<br>
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E. Banking and financial services E/4. Asset management.
Cash, portfolio, pension fund management services
Safekeeping of assets
Trust services
E/5. Advisory and agency services.
Credit reference and analysis.
Investment research and advice (including securities rating agencies).
Mergers, acquisitions, restructurings, management buyouts, venture capital.
E/6. Fees, commissions and other charges.
Transfers shall be free if the underlying service transaction is permitted.
Covers other services not mentioned under E1-E5.<br>
Cash, portfolio, pension fund management services
Safekeeping of assets
Trust services
E/5. Advisory and agency services.
Credit reference and analysis.
Investment research and advice (including securities rating agencies).
Mergers, acquisitions, restructurings, management buyouts, venture capital.
E/6. Fees, commissions and other charges.
Transfers shall be free if the underlying service transaction is permitted.
Covers other services not mentioned under E1-E5.<br>
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E. Banking and financial services CLIO liberalisation list
E/7. Branches, agencies, etc. of in the banking and financial services
includes securities dealing. Equivalent treatment
Self-employed intermediaries
Financial guarantees
Controlled investments (not more burdensome) Authorisation procedures
Representation
Representative offices
Membership in associations
Transfers Prudential Considerations
“7. Domestic laws, regulations and administrative practices needed to assure the soundness of the financial system or to protect depositors, savers and other claimants shall not prevent the establishment of branches or agencies of non-resident enterprises on terms and conditions equivalent to those applying to domestic enterprises operating in the filed of banking and financial services.”<br>
E/7. Branches, agencies, etc. of in the banking and financial services
includes securities dealing. Equivalent treatment
Self-employed intermediaries
Financial guarantees
Controlled investments (not more burdensome) Authorisation procedures
Representation
Representative offices
Membership in associations
Transfers Prudential Considerations
“7. Domestic laws, regulations and administrative practices needed to assure the soundness of the financial system or to protect depositors, savers and other claimants shall not prevent the establishment of branches or agencies of non-resident enterprises on terms and conditions equivalent to those applying to domestic enterprises operating in the filed of banking and financial services.”<br>
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Chart on Reservations under CLCIO<br>
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Country Experiences on Regulating and supervising bank branches<br>
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Establishment:
Conditions for establishment of branches v/v domestic banks:<br>
Conditions for establishment of branches v/v domestic banks:<br>
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Points of consideration
Availability of deposit insurance
Allowing retail banking operations for branches
Governance requirements (risk mgmt., boards, committees …)
Financial requirements (min cap req, fin. guarantees, asset pledges …)
Liquidity requirements
Resolution issues and bilateral agreements
See OECD report to the FSB on establishment of bank branches (2017) for more information<br>
Availability of deposit insurance
Allowing retail banking operations for branches
Governance requirements (risk mgmt., boards, committees …)
Financial requirements (min cap req, fin. guarantees, asset pledges …)
Liquidity requirements
Resolution issues and bilateral agreements
See OECD report to the FSB on establishment of bank branches (2017) for more information<br>
28
THANK YOU !<br>