A financial lobby group has warned that the rivalry among the region's financial centers that has created regulatory complexity and uncertainty, is undermining Asia's competitiveness in fintech.
The Asia Securities Industry and Financial Markets Association (ASIFMA) said in a report on Friday, noted that the regulatory hotch-potch is making it tough for firms to scale up even as governments across Asia - most notably Hong Kong and Singapore - have launched a raft of initiatives to grab a slice of the $100 billion invested in fintech globally.
"The regulatory landscape is very fragmented and a lot of the initiatives, though well-intentioned, are not necessarily well thought through," said Mark Austen, CEO of ASIFMA.
A call on Asian regulators to coordinate better and to adopt a consistent set of best practices for fostering fintech in the region, was given by the lobby group, which represents global banks and asset managers such as Goldman Sachs and BlackRock.
"By not cooperating on fintech, Asian financial centers are putting themselves at a real disadvantage relative to the rest of the world: that traditional competitive dynamic and rivalry between the likes of Hong Kong and Singapore may actually in this case be a disadvantage," said Hannah Cassidy, partner at Herbert Smith Freehills in Hong Kong, which contributed to the report.
According to a February report by global regulatory body the International Organization of Securities Commissions(IOSCO), thousands of fintech start-ups continue to proliferate, as investors poured $19 billion worldwide into fintech - including P2P lenders, distributed ledger technology and crowdfunding platforms - in 2016 alone.
From incubators and grants, to temporary license waiver schemes, with competition fiercest between rivals Hong Kong and Singapore, a range of special programs to attract and foster fintech ventures have been launched by Hong Kong, Singapore, Australia, Japan, South Korea and Malaysia.
Regulators are still struggling to establish clear and consistent regimes for fintech firms because they often operate innovative business models even while all these markets operate well-defined licensing and supervisory regimes for traditional financial firms including banks, brokers, insurance companies and funds.
For example, while cryptocurrency exchanges are licensed as online shopping malls, akin to clothes retailers, in South Korea, they are licensed as money changers and regulated by the customs authority in Hong Kong.
Aurelien Menant, CEO of Hong Kong bitcoin exchange Gatecoin.com said that this makes it very expensive for fintech firms based in places with small domestic markets like Hong Kong, Singapore and Australia to expand into the broader region.
"This is a very important issue for fintech firms in Asia," he said, adding he would welcome tougher standardized rules for alternative currency exchanges across the region.
in markets like Hong Kong, some aspiring fintech firms have struggled to gain licenses due to the lack of regulatory clarity.
"We are open to cooperation with regional and global regulators on fintech," the Hong Kong Securities and Futures Commission (SFC) said in a statement, adding it would be entering into new regulatory cooperations shortly, without elaborating.
The SFC conducts dialogue with other watchdogs through a dedicated fintech liaison officer and that it has taken a leading role in discussions around fintech within IOSCO.
There were no comments made by the Monetary Authority of Singapore.
(Source:www.reuters.com)
The Asia Securities Industry and Financial Markets Association (ASIFMA) said in a report on Friday, noted that the regulatory hotch-potch is making it tough for firms to scale up even as governments across Asia - most notably Hong Kong and Singapore - have launched a raft of initiatives to grab a slice of the $100 billion invested in fintech globally.
"The regulatory landscape is very fragmented and a lot of the initiatives, though well-intentioned, are not necessarily well thought through," said Mark Austen, CEO of ASIFMA.
A call on Asian regulators to coordinate better and to adopt a consistent set of best practices for fostering fintech in the region, was given by the lobby group, which represents global banks and asset managers such as Goldman Sachs and BlackRock.
"By not cooperating on fintech, Asian financial centers are putting themselves at a real disadvantage relative to the rest of the world: that traditional competitive dynamic and rivalry between the likes of Hong Kong and Singapore may actually in this case be a disadvantage," said Hannah Cassidy, partner at Herbert Smith Freehills in Hong Kong, which contributed to the report.
According to a February report by global regulatory body the International Organization of Securities Commissions(IOSCO), thousands of fintech start-ups continue to proliferate, as investors poured $19 billion worldwide into fintech - including P2P lenders, distributed ledger technology and crowdfunding platforms - in 2016 alone.
From incubators and grants, to temporary license waiver schemes, with competition fiercest between rivals Hong Kong and Singapore, a range of special programs to attract and foster fintech ventures have been launched by Hong Kong, Singapore, Australia, Japan, South Korea and Malaysia.
Regulators are still struggling to establish clear and consistent regimes for fintech firms because they often operate innovative business models even while all these markets operate well-defined licensing and supervisory regimes for traditional financial firms including banks, brokers, insurance companies and funds.
For example, while cryptocurrency exchanges are licensed as online shopping malls, akin to clothes retailers, in South Korea, they are licensed as money changers and regulated by the customs authority in Hong Kong.
Aurelien Menant, CEO of Hong Kong bitcoin exchange Gatecoin.com said that this makes it very expensive for fintech firms based in places with small domestic markets like Hong Kong, Singapore and Australia to expand into the broader region.
"This is a very important issue for fintech firms in Asia," he said, adding he would welcome tougher standardized rules for alternative currency exchanges across the region.
in markets like Hong Kong, some aspiring fintech firms have struggled to gain licenses due to the lack of regulatory clarity.
"We are open to cooperation with regional and global regulators on fintech," the Hong Kong Securities and Futures Commission (SFC) said in a statement, adding it would be entering into new regulatory cooperations shortly, without elaborating.
The SFC conducts dialogue with other watchdogs through a dedicated fintech liaison officer and that it has taken a leading role in discussions around fintech within IOSCO.
There were no comments made by the Monetary Authority of Singapore.
(Source:www.reuters.com)
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