Trends in financial services regulation in Asia Pacific 

My name is Simon Topping and I'm the Head of Financial Services Regulatory Centre of Excellence for the Asia Pacific region.

Clients are grappling with a large number of regulatory issues, but perhaps one of the most interesting areas I'm working in at the moment is working with tax and other areas to advise global clients on how to restructure their business in the Asia Pacific region.

The biggest challenge for institutions in Asia Pacific region is really liquidity. Capital is not a big issue for most institutions here but because the markets in Asia tend to be quite fragmented with a loss of currencies, loss of small capital markets, maintaining liquidity is really the big issue.

We've been advising clients on how to set up a liquidity framework that can work globally but can also work in local markets. Many of our clients are looking to establish local operations so that they can leverage the liquidity in the local markets.

Well one of the challenges for the institutions in the region is that they have global regulation. They have local regulation. They also have a lot of regulation being passed in the U.S. and Europe that affects them extraterritorially. I guess FACTA is the one that banks are most concerned about at the moment, but there's also U.K. Bribery Act and other pieces of legislation. So one of the challenges for institutions here really is to work out how they're affected by regulation being passed not just locally but in other parts of the world.

One of the big structural drivers is the bringing back into Asia Pacific a lot of assets that were off shored into the U.S. and U.K. A lot of regulators are driving banks to bring those assets back on shore. So those clients are looking for legal entities that they can book those assets back into.

One of the things that regulators are trying to do is to get business booked and managed in the same location whereas institutions have traditionally tried to run lots of businesses, particularly treasury businesses on a global basis where they get the benefit of netting. Now, if they break that down into several regional books, they've got challenges in how they can manage those accounts, how they can manage netting and how they can manage the hedging of those books.

I think the agenda for the next three to five years is fairly well established. There'll be a different pace of change in different markets but it's pretty clear what the direction's going to be. For many of our clients I think the issue is really how much of their business is going to be based in Asia Pacific and therefore what structure they need to achieve the sort of growth that they're looking for.