Covid-19, geopolitical issues under the spotlight at Asia-V

Industry experts note markets are resilient, but regulatory fragmentation remains a challenge

3 December 2020


A panel of legal and regulatory experts in Asia Pacific discussed how they are navigating an increasingly complex regulatory environment as a result of the global pandemic and geopolitical issues, and what they see as the main challenges and opportunities in the years ahead.

Jenny Cosco, co-head of government affairs, Asia-Pacific at Goldman Sachs, said the way financial firms quickly adapted to the Covid-19 crisis showed how operationally resilient the industry is. "In the case of my firm, at certain points during the past few months we had 98% of our global workforce working from home, which was impossible to imagine just a year ago," she said at FIA Asia-V on 2 December.

An issue that emerged during the crisis for many firms across the industry, however, concerned work transfer and the ability for colleagues to provide support to clients from other financial centers.

"This was challenging for several reasons due to licensing laws, the scope of permissible businesses, consumer protection laws, and of course the local regulatory regimes," Cosco said.  She added that mutual backup or business continuity plan waivers that are pre-approved by regulators could help the industry respond to future market disruptions.

In October, FIA along with other associations took a leading role in promoting mutual back-up and BCP waivers between jurisdictions in Asia Pacific, and FIA has engaged with regulators in Australia, Hong Kong, Japan, and Singapore on the matter.

Alex Orgaz-Barnier, senior manager, market infrastructure at the Australian Securities and Investments Commission, offered a regulator's perspective on the pandemic response. He said financial firms weathered the situation well, although he pointed to some areas that "require strengthening" in the planning, oversight and governance of business continuity arrangements at some organizations.

"There were also some gaps in our ability to monitor and supervise key participants, particularly the vendors and middleware providers that are not regulated but constitute a critical part of market infrastructure," he said. "There were a whole number of risks that were overall well managed during the crisis. Now we are in the process of identifying where arrangements need to be strengthened."

Geopolitical challenges

In addition to grappling with the impact of Covid-19, regulators and market participants have had to address several global macro-economic and political issues, including increased nationalism and pullback from globalization in some jurisdictions, the panelists said.

"One of the problems here is fragmentation of regulation," said Glenn Seah, head of legal, compliance and corporate secretariat at the Singapore Exchange. "Some of this has manifested in the form of reduced willingness of regulators and governments to adopt equivalence and regulatory deference, sometimes for political reasons. The consequence of this is increased compliance costs and other consequential costs of technology and operating processes which often end up being passed to the end user."

He added that this situation has also led to a conflict between different regulatory standards, regulatory duplication, and a higher bar of entry for out-of-country competitors.

"I would urge regulators and governments to think about that because the reduction of international open access to markets is not a good thing,” Seah said. "A deeper, more diverse, more competitive market is beneficial to everyone."

Benjamin Pynt, legal counsel at trading firm DRW, said the unpredictable geopolitical landscape is increasing challenges for legal and compliance teams.

"The challenge is staying abreast of changes and processing information that's coming through so commercial decisions can then be made," he said. "These issues range from whether markets can be accessed from offshore, and if so, from which jurisdictions, and the deployment of capital into particular jurisdictions. It is an ever-increasing challenge to keep on top of the changing environment."

Nathanael Lim, deputy director and head of the markets infrastructure supervision division at the Monetary Authority of Singapore, spoke about the importance of regulators working collaboratively to overcome cross-border regulatory issues.

"Singapore is an open and connected financial center, so for us dealing with cross border regulatory issues is inevitable and we ascribe strongly to the principle of regulatory deference. For example, in the area of supervision of exchanges incorporated overseas, we generally defer to the regulatory oversight of the home regulators. The best way to deal with these issues is through close collaboration with counterparts on both a bilateral basis and at the multilateral level through international forums," he said.

"A good understanding of each other's perspectives and concerns means that some tensions can be resolved, and compromises reached. As a regulator, I can understand my counterparts' key concerns and they understand mine. If there is a will, we can together devise a compromise that meets mutual regulatory needs and achieve a mutually beneficial outcome."

A recording of the full webinar is available to registered attendees. For a list of FIA's Asia-V conference programming, visit:

  • FIA
  • MarketVoice
  • Asia-Pacific
  • COVID19
  • Cross Border
  • Regulation