HONG KONG Nov 27 The head of Hong Kong's market
watchdog urged Asian regulators on Tuesday to maintain high
standards and come together to stop U.S. and European regulators
imposing their rules on the region's financial markets.
Ashley Alder, chief executive of the Securities and Futures
Commission (SFC), said there was a danger a "one-size fits all"
set of financial rules will be foisted on Asian banks and
brokers by Western regulators unless the region's watchdogs
"If Asia does not get properly involved in the global
regulatory agenda, we will find that the U.S. and European rules
will be extended to us whether we like it or not" said Alder.
"The result could be an isolation of Asian markets from
international finance," he added, speaking at the third annual
Thomson Reuters Pan-Asian Regulatory Summit.
Banks in Asia have become increasingly concerned by the
overseas reach of new U.S financial regulations.
One big area of contention is the new rules on derivatives
trading under the Dodd-Frank Act. U.S. regulators want to ensure
that the rules apply to cross-border trades between, say, a Wall
Street and an Asian bank.
Asian regulators are concerned that would mean banks in
their countries would have to follow U.S. and domestic
regulation, which may in some cases clash and drain liquidity
from their markets.
In a rare unified move, regulators from Australia, Hong Kong
and Singapore wrote a joint letter to the U.S.'s Commodities and
Futures Trading Commission (CFTC) in August asking them to
review the overseas reach of these new rules.
"The fact that this letter came from multiple regulators had
a real impact and it undoubtedly changed the debate," said
Alder, who took up his post a year ago, said that it was
vital that cross-border rules be internationally agreed, and
that Asia had no interest in having laxer rules than the West.
"There is no advantage of lowering our standards to attract
business. This kind of regulatory arbitrage always ends badly,"
But he added that if Asian regulators did not push Western
regulators to agree on a workable set of international rules,
big banks could be forced out of the region's markets.
"The threat is that if we or Asian firms don't play ball,
international firms will find it hard to operate here, seriously
harming liquidity in these markets. It could be a case of my way
or the highway."
(Reporting by Rachel Armstrong and Michael Flaherty; Editing by