Peso Ascends, Colorado Pot, Tax Code Forecast: Compliance

Mexico’s peso is poised to close 2013 as Latin America’s best-performing major currency after lawmakers approved legal changes for the energy, financial and telecommunications industries to bolster economic growth.

A yearlong legislative push in 2013 from President Enrique Pena Nieto culminated with a bill approved last month to open the nation’s energy industry to more private investment, prompting Standard & Poor’s to raise the country’s credit rating one step to BBB+, the third-lowest investment grade. The government estimated an energy overhaul will lift economic growth by 1 percentage point by 2018.

In addition to the law that ends Petroleos Mexicanos’s 75-year production monopoly and will allow for companies such as Exxon Mobil Corp. and Chevron Corp. to develop crude, Pena Nieto shepherded through at least 10 constitutional amendments in his first year in office. The changes included legislation to curb the market power of dominant telecommunications companies, such as billionaire Carlos Slim’s America Movil SAB.

While analysts surveyed by Bloomberg are projecting that Latin America’s second-biggest economy will have expanded by 1.3 percent in 2013, they forecast that Mexico’s gross domestic product will grow by 3.47 percent in 2014 and 3.9 percent in 2015.

Analysts surveyed by Bloomberg project that the peso will strengthen 0.7 percent to 13 per dollar by the end of March, according to the median forecast of economists surveyed by Bloomberg.

Compliance Policy

Pot Shops Open in Denver as Colorado Projects $578 Million Sales

Fourteen shops selling marijuana legally were expected to open in Denver yesterday, having obtained state and local licenses in time to sell marijuana to anyone 21 or older starting Jan. 1, just over a year after Colorado and Washington voters made their states the first to legalize recreational use.

Washington’s shops are expected to open later this year.

Colorado projects $578.1 million a year in combined wholesale and retail marijuana sales to yield $67 million in tax revenue, according to the Legislative Council of the Colorado General Assembly. Wholesale transactions taxed at 15 percent will finance school construction, while the retail levy of 10 percent will fund regulation of the industry.

Licenses for 136 marijuana stores, a majority in Denver, were mailed Dec. 23, the Colorado Revenue Department said in a statement. Recreational marijuana businesses can open only after receiving both a state and local license, said Julie Postlethwait, a spokeswoman for the Marijuana Enforcement Division.

Only existing medical-marijuana retailers can apply for the licenses until July 1, she said. In Denver, home to the state’s largest number of such dispensaries, that deadline extends through Jan. 1, 2016.

The city’s newly licensed shops feature names such as The Green Solution, The Healing House Denver and The Denver Kush Club, according to a map on the Denver city government’s website.

Colorado residents with a photo identification showing they are at least 21 may buy as much as one ounce of pot in a single transaction, while those from out of state can get a quarter ounce, Postlethwait said. Customers can’t consume the product in public, including at the shops.

Marijuana possession and sale remains illegal under federal law. In August, the U.S. Justice Department said it wouldn’t challenge the legalization laws in Washington and Colorado provided the states prevent out-of-state distribution, access to minors and drugged driving, among other restrictions.

In Washington, retailers will begin selling marijuana around June, according to Brian Smith, a spokesman for the State Liquor Control Board, which is overseeing the industry.

Bank Indonesia Hands Over Bank Supervisory Role to OJK

Bank Indonesia Governor Agus Martowardojo and Financial Services Authority Chairman Muliaman Hadad signed a document in a ceremony signaling the handing-over of the bank supervisory role to the authority in Jakarta Dec. 31.

Bank Indonesia will continue to coordinate with the Financial Services Authority, known as OJK, for at least another three years, Martowardojo said.

The central bank handed over a 500-page book detailing the latest developments in the banking industry to OJK, Bank Indonesia Deputy Governor Halim Alamsyah said at a press briefing.

As part of the transition, more than 1,150 of Bank Indonesia personnel will go to OJK, Alamsyah said at the briefing. Bank Indonesia and OJK must follow up with cooperation on macro and micro-prudential policy drafting, Alamsyah said.

Compliance Action

China Approves $353 Million of Share Sales as IPOs to Resume

China’s securities regulator approved the initial public offerings of five companies seeking to raise about $353 million, paving the way for share sales to resume after a freeze of more than one year.

Neway Valve (Suzhou) Co. received approval for a first-time sale in Shanghai that could seek about 839 million yuan ($138 million) and will start marketing its shares early this month, the maker of industrial valves said in statements to the Shanghai Stock Exchange Dec. 30. Truking Technology Ltd., Guangdong Qtone Education Co., Guangdong Xinbao Electrical Appliances Holdings Co. and Zhejiang Wolwo Bio-Pharmaceutical Co. secured approval to list on the smaller Shenzhen exchange, separate filings by the companies showed.

China hasn’t had an initial public offering since October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and issuers. Fifty companies are expected to be ready by the end of January, the China Securities Regulatory Commission said Nov. 30 after pledging to move toward a U.S.-style IPO registration system.

It will take about a year to clear the backlog of more than 760 companies waiting to go public, the CSRC said when announcing the changes to the IPO system. Another several companies will likely receive approvals in the next few days, the China Securities Journal reported Dec. 31, citing unidentified people at the companies.

SAC Said to Gain 20% in 2013 Amid Federal Insider-Trading Probe

SAC Capital Advisors LP, the $14 billion hedge-fund firm run by Steven Cohen, posted a 20 percent gain last year through the last full week of 2013 amid the U.S. government’s insider-trading probe, according to a person briefed on the returns.

SAC rose 1.9 percent during the last month through Dec. 27, according to the person, who asked not to be identified because the information is private.

Cohen’s firm agreed in November to plead guilty and pay a record $1.8 billion for perpetrating an insider-trading scheme stretching back to about 1999. Earlier this month, a federal jury found former SAC manager Michael Steinberg guilty of using illegal tips to trade stocks of technology companies. Another manager, Mathew Martoma, is scheduled to go on trial Jan. 6. The U.S. Securities and Exchange Commission in July filed an administrative action against SAC founder Cohen, 57, who hasn’t been charged with a crime.

Reuters reported SAC’s returns Dec. 31.


Volcker Rule Court Halt Request Withdrawn by Bankers Association

The American Bankers Association dropped its request for a federal judge to temporarily block Volcker Rule restrictions on collateralized debt obligations backed by trust-preferred securities.

The industry group said the temporary restraining order it had requested is no longer needed after regulators said Dec. 27 they are reviewing challenged aspects of the rule, according to a filing Dec. 30 in federal court in Washington. The bankers group isn’t withdrawing the lawsuit.

The American Bankers Association, which represents mostly community banks, alleged in its complaint against the Federal Deposit Insurance Corp. and other regulators that small banks will suffer about $600 million in losses because the final version of the Volcker Rule requires them to divest their holdings in some CDOs.

Regulators said Dec. 27 that they were reviewing whether it would be “appropriate and consistent” with the Volcker Rule to allow exemption of TruPS-backed CDOs. They said they will address the matter by Jan. 15.

The case is American Bankers Association v. Federal Deposit Insurance Corp., 13-cv-02050, U.S. District Court, District of Columbia (Washington).


Bell Says Major U.S. Tax-Code Overhaul Unlikely in 2014

Steve Bell, a senior director at the Bipartisan Policy Center, talked about U.S. tax policy and the outlook for the political climate in 2014.

He spoke with Deirdre Bolton and Phil Mattingly on Bloomberg Television’s “In the Loop.” For the video, click here.

Bitcoin Rise Shows Inflation Worry, China Bank Official Writes

Bitcoin investment reflects people’s concern over inflation, Sheng Songcheng, head of the People’s Bank of China’s statistics and analysis department, wrote in an article published on

Central banks should improve management of liquidity and “reasonably” control the money supply to keep price basically stable to calm this concern, Sheng wrote.

Bitcoin and other virtual currencies will never become “real currencies,” as long as there are currency systems based on “government credit,” according to Sheng. Bitcoin is a technological supremacy and libertarian fantasy, Sheng wrote.