Report: Growing Asian Markets Increasingly Regulated

Jun 26 2012 | 9:19am ET

Asset managers looking to Asia for growth should bear two things in mind, says a new KPMG report: the region is not one homogeneous market and regulation there is just as strict as in the U.S. and Europe.

Tom Brown, European head of investment management at KPMG, said in a statement: “Asia, along with Latin America, is unquestionably the hotspot for growth; however asset managers would be unwise to expect lighter touch regulation in the region. The fast pace of change in product distribution, disclosure and investor protection that we have witnessed in Europe and the US has transferred across to Asia with enhancements to investor protection and product disclosure a definite priority for a number of regulators across the region. While the change varies between jurisdictions, the direction of travel is crystal clear.”

Regulatory developments in the region include Singapore’s Financial Advisory Industry Review, the Future of Financial Advice in Australia and additional disclosure requirements in Japan.

KPMG says the asset management industry faces increased reporting and accountability to improve transparency; consumer conduct looking to increase investor protection and industry trust; and additional risk management requirements.

Brown says the challenge is to “deal with the plethora of regulation on a practical level…This cost cannot be underestimated as it is not just the time spent, it is also the fact that management’s attention is being taken away from broader agendas such as their growth strategies.”

Bonn Liu, KPMG's Asia Pacific head of investment management, offers another piece of advice to asset managers looking to Asia for growth. They must take care, she says,  not to “fall into the trap of seeing the Asian region as one homogenous market. It is made up of a number of very different nations, all at different stages of market maturity, customer expectations and regulatory sophistication.”


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