Best practice?
This is not the first time that asset managers and distributors in Asia have been impacted by regulations imposed by another market or region.
Citing an example, Gordon said that the US Foreign Account Tax Compliance Act (Fatca), which was enacted in 2010, requires financial institutions outside the US to report financial account information of US taxpayers to the US IRS.
“With all these regulations, everyone [globally] has to deal appropriately with a regulation that is multi-jurisdictional in nature, and sometimes there is an indirect impact that complicates it.”
However, both Gordon and Phillis acknowledged that regulators are trying to find best practices.
“Providing information to people that should help them make better decisions about their money is a good thing,” Phillis said. “Whether Mifid achieves those objectives remains to be seen over time, but I do think that the intentions are good.”
Phillis noted, however, that the costs of regulation have gone up, especially after the global financial crisis in 2008. This, coupled with lower margins, has led to some consolidation in the industry.
GDPR
Besides Mifid II, firms in Asia, particularly distributors, should watch out for the General Data Protection Regulation (GDPR), according to Phillis.
The GDPR, which seeks to strengthen data protection of EU residents, applies to all companies inside and outside of the EU that collect data from EU residents. The new regulation will come into effect in May.
“It would probably impact the distributors more than the fund managers here because they would be the ones with the personal data of EU residents,” Phillis said. However, asset managers are also impacted if they have personal data of EU residents in their systems, she noted.
