New regulation pushing Western finance firms eastwards
SINGAPORE/LONDON Nov 21 (Reuters) - The regulatory overhaul in western economies is accelerating moves by the finance industry to shift more business and assets to Asia, according to a survey of global business leaders released on Monday.
Executives questioned by international law firm Allen & Overy were mainly in favour of countries harmonising their regulatory regimes.
However, the report said, national political interests appeared to be trumping international co-ordination, meaning the regulatory landscape was looking increasingly fragmented.
Alan Ewins, a regulation partner at A&O's Hong Kong office, said the trend of finance moving to east from west began with the financial crisis as firms seek better growth.
"Private wealth management activity is increasing as the number of wealthier investors is unlocked. We are also seeing more commodities trading, more focus on derivatives and generally more readiness to tap into the emerging power in Asia Pacific countries," Ewins said.
"One only needs to look at the pattern of job losses in financial services in Europe and the hiring that is going on in Asia to see that banks are reallocating their resources."
The report found 62 percent of executives surveyed wanted more regulatory harmonisation, with the most support coming from those in India, Singapore and Thailand. Some 65 percent of executives in South Korea wanted less harmonisation.
Asian countries have all signed up to the G20 group of leading economies' commitments to regulatory change, including tougher rules on bank capital and derivative trading.
The G20's regulatory task force, the Financial Stability Board, was launching its Asian consultative group of regulators and central bankers from across the region on Monday.
The region fared relatively better during the financial crisis than Europe and the United States, with governments not facing the same political pressure for a complete rewriting of regulatory rule books.
"While the west seems to be focused on constraining business through regulation, the east is doing all it can to harness the potential of business to fuel growth. The competition between markets to attract business is only going to intensify," Ewins said.
While financial institutions may be keen to shift more resources over to Asia, the survey found China was seen as the toughest market to enter, with 20 percent of respondents naming it ahead of the United states which had 18 percent. (Editing by Dan Lalor)
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