Financial Regulation in AsiaCharles Taylor, Chief Operating Officer         Asia House, London         19 September 2012  ...
The regulatory cycle                               Crisis management                                and stabilisation     ...
Global regulatory architecture                                                       G20                 BCBS             ...
Global reform timeline                       2010      2011      2012      2013     2014      2015      2016      2017    ...
A deluge of financial regulation                                        Basel IIIAlternative Investment Fund Managers Dire...
A deluge of financial regulation (2)    Undertakings for Collective Investment      in Transferable Securities (UCITS IV) ...
A deluge of financial regulation (3)       Dodd-Frank Wall Street Reform Act    Extraterritoriality       Foreign Account ...
Banks – changes to business strategySource: IMF
Annual % GDP growth16141210 8                                         Hong Kong                                         Ta...
Regional approaches to regulation –      Banking and Insurance - India• Banks  –   Capital adequacy requirements by Jan 20...
Regional approaches to regulation –     Banking and Insurance - China• Banks  – Basel III generally supported as better po...
Regional approaches to regulation –    Banking and Insurance - Singapore• Banks  – Adopting higher standards than Basel II...
Regional approaches to regulation –   Banking and Insurance – Hong Kong• Banks  – Broadly supportive of Basel III  – Requi...
Regional approaches to regulation –     Banking and Insurance - Taiwan• Banks  – Will adopt Basel III rules “as is”  – Dea...
Financial Regulation in AsiaCharles Taylor, Chief Operating Officer         Asia House, London         19 September 2012  ...
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Financial Regulation in Asia: Charles taylor, Chief Operating Officer, International Centre for Financial Regulation (ICFR)

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Charles Taylor is the Chief Operating Officer and a founding Director of the International Centre for Financial Regulation. His focus is on regulation of non-financial corporates, regulation and governance in emerging markets, financial reporting and the role of technology in governance, risk, and compliance. Charles has extensive knowledge of technology for the financial services market and has also developed businesses in Asia and USA.

Published in: Economy & Finance, Business
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Financial Regulation in Asia: Charles taylor, Chief Operating Officer, International Centre for Financial Regulation (ICFR)

  1. 1. Financial Regulation in AsiaCharles Taylor, Chief Operating Officer Asia House, London 19 September 2012 www.icffr.org
  2. 2. The regulatory cycle Crisis management and stabilisation Growth and credit vs. Grand plan stability • Industry pushback recover Economies start to grows Regulatory capture? • G20 international cooperation • • Political commitment wanes Tension packages international ideals Forbearance? Rescue between • Financial Stability Board • • G20 faltersmonetary policy and domesticreassesses What kind of financial system? Fiscal and / imperatives • Turner / De Larosiere reports • • Long implementation phase again Industry behaviour - punish beginsmore Fairness, pushback becomes Direct intervention • Economies begin to steady • Regulatory capture manifestintermediation – new risks Shadow Testing legislative Detailed legislative proposals proposals
  3. 3. Global regulatory architecture G20 BCBS IAIS IOPS IOSCO Basel Committee on International International International Banking Supervision Association of Organisation of Organisation of Insurance Pension Supervisors Securities Supervisors Commissions FINANCIAL FINANCIAL JOINT FATF STABILITY STABILITY FORUM Financial Action Task Force on INSTITUTE FORUM Joint Forum on Money Laundering Financial Conglomerates IMF BIS ECB IASB IBRD OECD International Bank for European International International OrganisationMonetary Fund International Central Bank Accounting Bank for for Economic Settlements Standards Reconstruction Cooperation Board and and Development Development
  4. 4. Global reform timeline 2010 2011 2012 2013 2014 2015 2016 2017 2018 In Basel III Rule making Phasing in effect Phasing Solvency II Rule making In effect in Systemic Rule making Phasing in In effect oversight OTC derivatives Rule making Phasing in In effect Volker rule Rule making Phasing in In effect Various Global, EU and FSA discussions, consultation, amendments and revised legislation
  5. 5. A deluge of financial regulation Basel IIIAlternative Investment Fund Managers Directive (AIFMD) Solvency II Extraterritoriality Market in Financial Instruments Directive (MiFID I / II) Prospectus and Transparency Directive Credit Rating Agencies (CRA3) EU Corporate Governance Regulations
  6. 6. A deluge of financial regulation (2) Undertakings for Collective Investment in Transferable Securities (UCITS IV) Market Abuse Directive (MAD) Regulation of OTC Derivatives (MiFID) Capital Requirements Directive Extraterritoriality (CRD IV) Bank Structural Reform (Vickers) Financial Transaction / Activities Tax Extraterritoriality (FTT / FAT)
  7. 7. A deluge of financial regulation (3) Dodd-Frank Wall Street Reform Act Extraterritoriality Foreign Account Tax Compliance Act Extraterritoriality (FATCA) Investment Advisers Act Rating Agency Confirmations Swaps and Derivatives Regulation Extraterritoriality (OTC) Bank Structural Reform (The Volcker Rule)
  8. 8. Banks – changes to business strategySource: IMF
  9. 9. Annual % GDP growth16141210 8 Hong Kong Taiwan 6 Singapore China 4 India 2 0 2007 2008 2009 2010 2011-2-4
  10. 10. Regional approaches to regulation – Banking and Insurance - India• Banks – Capital adequacy requirements by Jan 2013 – Fully implemented March 2018 – Average equity capital ratio 9% – Overall capital adequacy ratio 14% – Well positioned to meet leverage and liquidity ratios• Insurance – “We are keen to migrate to Solvency II” (MoF) – “Our country does not have the statistical database to adopt Solvency II. I don’t think we have taken a position whether we will be using Solvency II or not” (RK Nair, IRDA)
  11. 11. Regional approaches to regulation – Banking and Insurance - China• Banks – Basel III generally supported as better positioned than EU and US banks to meet requirements – Capital adequacy requirements start Jan 2013 – Fully implemented Jan 2019 – Common equity ratio will be 5% (BIII = 4.5%) – Leverage ratio will be 4% (BIII = 3%)• Insurance – “Second generation of solvency regulation” (not Solvency II) – EU to grant “third country equivalence” to China reforms – 3 to 5 year timescale for implementation
  12. 12. Regional approaches to regulation – Banking and Insurance - Singapore• Banks – Adopting higher standards than Basel III – Competitive advantage – Tier 1 Capital 8% (BIII = 6%)• Insurance – Strong risk-based capital framework – Review may result in adoption of what MAS considers Solvency II’s strongest ideas
  13. 13. Regional approaches to regulation – Banking and Insurance – Hong Kong• Banks – Broadly supportive of Basel III – Required liquidity constraints may hinder development of corporate debt market – Reforms will phase in from Jan 2013• Insurance – Will not adopt Solvency II – Attempt to attract other insurers to the jurisdiction – New independent insurance regulator planned
  14. 14. Regional approaches to regulation – Banking and Insurance - Taiwan• Banks – Will adopt Basel III rules “as is” – Deadline – Jan 2019• Insurance – Weak insurance market – Will enhance regulation but not adopt Solvency II
  15. 15. Financial Regulation in AsiaCharles Taylor, Chief Operating Officer Asia House, London 19 September 2012 www.icffr.org

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