PASLA/RMA securities lending conference: regulatory woes
07 March 2013 Hong Kong
Image: Shutterstock
The second day of the Pan Asia Securities Lending Association (PASLA)/Risk Management Association (RMA) Conference on Asian Securities Lending started with welcomes and updates from the PASLA and RMA chairmen, with Martin Corrall of Citi and Jason Strofs of the RMA expressing their respective committees鈥� keen desires to keep on getting in-front of regulators and pushing through change.
Stating that US Dodd-Frank Act Rule 165(e) was of most concern right now, regulation was also on the minds of the next panel as they discussed the future of securities finance in the Asia-Pacific region. A State Street representative from Hong Kong was adamant that risk profiling is not an issue any more; it鈥檚 a given, with another lending head in Pittsburgh stating that Rule 165(e) only has an effect if one provides indemnification.
A Citi speaker from New York was next to the floor, drawing on his experience working for the International Monetary Fund (IMF) in a speech that gave attendees valuable insight into what regulators are thinking.
He swept through structural reform and sovereign debt from around the world in a break-neck half hour, discussing contagion from the intensified euro sovereign/bank crisis, and his proposals for what can be done to improve growth problems. He suggested implementing certain kinds of structural reforms, including product market reforms, where pricing is looser and dictated by the market. As for how long it will take, he predicted five years.
As for China, the Citi speaker was confident that it is moving away from its export model, which depends on low-wage, low cost, due to social unrest, and in doing so, is following the path of Taiwan and South Korea. Due to this, the country鈥檚 growth could slow down over the next five to 10 years as per capita GDP starts to rise.
The Citi speaker also stated that shadow banking is an issue in China, creating vulnerabilities that a lack of transparency poses. Wealth management should collectively worry as a sector, as the Citi speaker indicated that regulators would be on their tails when it came to maturity mismatches with some of their products.
Stating that US Dodd-Frank Act Rule 165(e) was of most concern right now, regulation was also on the minds of the next panel as they discussed the future of securities finance in the Asia-Pacific region. A State Street representative from Hong Kong was adamant that risk profiling is not an issue any more; it鈥檚 a given, with another lending head in Pittsburgh stating that Rule 165(e) only has an effect if one provides indemnification.
A Citi speaker from New York was next to the floor, drawing on his experience working for the International Monetary Fund (IMF) in a speech that gave attendees valuable insight into what regulators are thinking.
He swept through structural reform and sovereign debt from around the world in a break-neck half hour, discussing contagion from the intensified euro sovereign/bank crisis, and his proposals for what can be done to improve growth problems. He suggested implementing certain kinds of structural reforms, including product market reforms, where pricing is looser and dictated by the market. As for how long it will take, he predicted five years.
As for China, the Citi speaker was confident that it is moving away from its export model, which depends on low-wage, low cost, due to social unrest, and in doing so, is following the path of Taiwan and South Korea. Due to this, the country鈥檚 growth could slow down over the next five to 10 years as per capita GDP starts to rise.
The Citi speaker also stated that shadow banking is an issue in China, creating vulnerabilities that a lack of transparency poses. Wealth management should collectively worry as a sector, as the Citi speaker indicated that regulators would be on their tails when it came to maturity mismatches with some of their products.
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