Regulatory reforms in the US and Europe are having an effect far beyond their regional borders, says HSBC’s head of securities services for Asia-Pacific in an interview with Euromoney | Sibos Insider. In response to regional reforms multi-national companies are viewing Asia-Pacific as an increasingly attractive location to do business in securities as existing clients are increasing their focus on the area and demanding more asset servicing.
“We are seeing an increase in competition in the Asia-Pacific region, but it’s not caused by new start-ups. It’s more a case of companies with a global presence increasing their level of focus on the region,” says Ian Banks, head of HSBC securities services Asia-Pacific.
In the securities market, companies are looking to do business in Asia in fields that have been more traditionally associated with Western markets. “There’s increasing interest in government debt in the region,” notes Banks.
Asia has suffered less from recent events than either the US or Europe has in terms of regulatory reforms. This comparative lack of reformatory turmoil has meant that the individual countries in the region have felt less pressure to alter their regulatory regimes. Companies operating in the region have been able to avoid the costs associated with adapting to fresh regulations.
“There are fewer stresses on the individual countries in the region, and the region isn’t feeling a need to catch up with the changes occurring in the West, so things may remain stable for some time,” says Banks.
Banks admits that the regulations are not going to stand still forever, but at least when they change they are likely to do so in a less sudden fashion than has been the case in the US and Europe recently. The downside is that Asia consists of a large number of countries with little regulatory harmonisation between them – this can be particularly problematic when dealing with complicated legislative regimes, such as those dealing with tax.
While regulatory reform in the EU can be painful to respond to, at least the changes are uniform across the whole market – this is not the case in a region as fragmented as Asia.
“We will see the regulations evolve, it’s hard to say how, but I suspect that we’ll see it happen at a national rather than regional level – meaning the need for flexibility in Asia-Pacific is high,” says Banks. “Asia is very much a matter of understanding individual countries, things may not be changing as much as in the US, but each country has its own unique set of regulations.”
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