A recurring theme in my recent conversations with CEOs and senior executives in Asia is financial regulation. First introduced three years ago, regulations from Dodd-Frank to Basel III were designed to increase market transparency and accountability. In Asia, there appears however to be some uncertainty and concern on the implementation of these new rules and concerns over the costs of implementation.
Just last month, we conducted a survey with over 130 risk managers and compliance officers in Hong Kong and Singapore, the results of which reaffirmed what we have been hearing from clients.
— Clearing mandates around OTC derivatives and having adequate systems to maintain an audit trail for compliance are top of mind for our clients over the next 12 months, with 60% of respondents in Hong Kong and Singapore viewing the clearing of OTC derivatives very critical or important.
— Implementation is clearly the key hurdle. Over 50% of respondents view implementation of new regulations as the main challenge in the regulatory space over the next 12 months, even more so than costs or compliance time-lines.
— The other challenge lies in understanding of the various regulations underway as many believe that regulators need to give them more information to prepare for implementation, particularly of new OTC derivatives regulation.
That said, Asia’s financial institutions are taking a proactive approach with regulatory reform. Over 60% of respondents say that they will be investing more in better analytics and risk modeling over the next year, while others are investing in risk systems and better cross functional communication. What’s revealing is that across Hong Kong and Singapore, most are expecting to spend 20-40% more on regulatory reporting, technology and infrastructure to comply with new regulations over the next 12 months. So there is a level of preparation and investment this year than ever before.
At Bloomberg, we will continue to be on the forefront of working with regulators in the U.S., Europe and Asia to bring information to market and understand the needs so our clients have access to compliant solutions when regulations go into effect.
Grant Coombe, Head of Sales for Asia Pacific, Bloomberg