- The Asia Securities Industry and Financial
Markets Association released a white paper today that
included its recommendations for the sustained growth of
Asia’s capital markets;
- The white paper, targeted at policymakers and
regulators, emphasised the need to develop a regional
– rather than domestic – platform for
capital markets in Asia to facilitate cross-border
transactions;
- In particular, lawyers will play an important
role in establishing standardised documentation for certain
products throughout the region.
Today the Asia Securities Industry and Financial Markets
Association (Asifma) released its white paper on the
development of Asia’s capital markets. It
highlighted the need for transparent and harmonised regulation
across the region.
Although the pace of
Asia’s economic growth has exceeded that of other
regions, the structural development of its capital markets has
not kept pace. Asifma’s white paper detailed
industry recommendations for the continued growth of
Asia’s capital markets.
It recommended policymakers across
the region to encourage the growth of regional-wide capital
markets. For regional capital markets to continue their growth,
policymakers must establish regulatory regimes and market
infrastructure that functions across products and
jurisdictions.
Asifma CEO Mark Austen told IFLR that Asia’s capital markets
need to move to another level, which would require a greater
regional cooperation than has been seen before.
Related links
Asifma: Asia’s 2014 regulatory
outlook
How US prudential standards could fragment global
market
How lawyers will shape Asian
high-yield
What’s
needed
The white paper included
Asifma’s recommendations for the development of
five market segments in the Asia-Pacific: equities, fixed
income, foreign exchange, commodities and derivatives. While
there are specific recommendations for each segment, the bulk
of the paper focuses on harmonisation of the markets across the
region.
As an example, Austen noted the
status of local currency corporate bond markets in
Asia.
While local currency bond markets
have developed, most of that development has happened in the
government space, Austen said. While governments might want to
control their own national markets, a regionalised model with
trading platforms that go across borders would make more sense
for the corporate bond market.
In addition to developing regional
market infrastructure, the white paper recommended improving
the bankruptcy, insolvency and resolution regimes across Asia
and implementing more consistent and effective legal and
regulatory regimes.
A newer asset class might also
provide an example for the rest of the Asia-Pacific.
"Ironically, the one asset class
that has seen the most regionalisation is the offshore RMB
market," said Austen.
New markets have recently started in
Taiwan and Singapore, while the product originally began in
Hong Kong. This is creating a much more regional market outside
of China, Austen added.
He predicted that going forward, the
RMB market and RMB as a currency will play a much bigger role
in the region, which still relies heavily on US dollar
funding.
"Although RMB funding might not
challenge USD funding in five years’ time, it will
certainly become much more important," he said.
What lawyers can
do
Aside from taking part in
consultations regarding broader market infrastructure and
regulatory issues, lawyers and compliance teams play key roles
in establishing disclosure and documentation standards across
the region. For example, they could take the lead in developing
standard covenant practices within the corporate bond
market.
"Lawyers and compliance teams should
be focusing on creating greater standardisation of practices
across the region through documentation," said Austen. "They
need to not only look at what’s been done in the
US and Europe, but what makes sense from an Asian point of
view."
Related
links
Asifma: Asia’s 2014 regulatory
outlook
How US prudential standards could fragment global
market
How lawyers will shape Asian
high-yield