US regulations pushing derivatives business back into Asia
Dodd-Frank and other US regulations will create opportunities for Asian banks, but also challenges for their US operations. June 17, 2011 | Peter HoflichWith the US and UK being the homes of the two most important financial centres, as well as as the epicentres of the financial tsunami, and now also the hotbeds of regulatory and political pressure on bank operations, it seems that Asian regulators are more interested in following what happens there—and to understand implications for financial services everywhere—than to linger to long on local concerns. Partially this is because of opportunities that are being created, with onerous regulations pushing certain operations out of US and UK markets. Local regulators—and politicians—will, of course, have to decide for themselves whether they want to have this business or not. With an atmosphere of being able to prove ring-fenced operations, regulators want to see proof that national operations will be able to withstand problems that originate in other markets, and investment banks are starting to look into what they will need to do if they are not able to book Asian business in New York. This is particularly relevant for derivatives operations; how will the global investment banks prepare for a new situation where all Asian business is actually booked in Asia? It may mean the creation of new legal vehicles, application for more comprehensive licenses, the hiring of staff and the renting of new office space. Clearly this would be an opportunity for Asian financial centres to build up their relevance to the global financial services industry, and to the satellite businesses that service derivatives operations; for Asian investment banks, it will also be a drain on poachable staff, as well as those vulnerable to wage inflation. But as China and its currency internationalises, these investment banks will have larger local bases to pour into creating renminbi products with a great deal of push and pull, to the betterment or detriment of the business. But just as a new culture of ringfencing will affect US banks, so it will affect Asian ba... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Exchanges, Markets & Exchanges, Risk and Regulation, RmbExchanges,Markets Exchanges,Risk and Regulation,Rmb, Exchanges,Markets & Exchanges,Risk and Regulation,Rmb, Keywords:Dodd Frank, Derivatives Dodd Frank, Derivatives
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