Fund managers in Asia are adopting a ‘wait and see’ attitude towards the anticipated increase in regulation, according to an RBC poll conducted at FundForum Asia.
In the poll, 65 percent of industry professionals in attendance said they believed it is preferable to avoid being a first mover when it comes to tackling new regulations and finding opportunities in them.
Given the complexity of dealing with several supervisory boards and competing initiatives, the sheer number of these initiatives and the quickly-changing criteria, some firms consider it better to mitigate risk by first seeing how the first movers cope and learning from their experiences.
Only 29 percent of the audience answered that it was best to be among the first to act.
When asked about regulation in Asia, 83 percent believed that there will be an increase in regulations, while 12 percent said that it will stay the same but that Asian asset managers will be affected by more North American and European regulation, as well as local initiatives.
Andrew Gordon, managing director for RBC Investor & Treasury Services in Asia, said: “This poll suggests that against a backdrop of regulatory change and reform there is an underlying conservatism among asset managers in Asia, combined with an appreciation of the importance of prioritisation.”
He added: “Asset managers need to determine where the level of client demand, credible investment solutions and the ever-changing regulatory environment intersect to find the sweet spot for product development and distribution.”
The results also suggested confidence in the potential of the Asian market. When asked about passporting initiatives, over 70 percent of those polled believed that in five years’ time, the Hong Kong – China Mutual Fund Recognition will be the more successful. About 16 percent put their faith in the ASEAS passport, and 13 percent believed that the APEC Regional passport will be the most effective.
Over 78 percent also agreed that the number of countries participating in Asian passporting schemes is set to increase.
Gordon said: “Ultimately, however, the success of any passporting initiative will lie not in the number of markets it includes but the assets that it is able to attract, and retain.”
He added: “A successful passporting scheme will need to have a significant advantage in terms of ease of access, cost, automation and technology, in order to be an efficient platform able to distribute products to investors across countries.”
The poll was conducted during a FundForum panel discussion. Respondents included institutional investors, solution providers, advisors, regulators and lawyers, with 70 percent of attendees from Asia, about 25 percent travelling from Europe, and 5 percent from the US.
Image: Shutterstock 