More than three quarters of Asia-Pacific firms fear regulatory risk

Report suggests regional market participants are struggling to deal with regulatory burdens, investment expected

By Michael McCaw | 9 August 2018

Investment in data analytics may be the solution to concerns around regulatory uncertainty for Asia-Pacific-based financial market firms, according to a new survey by AxiomSL.

76% of the survey’s Asia-Pacific-based market participants are more concerned this year than last about their ability to comply with regulations.

“There’s a whole rewrite of the regulations in Asia-Pac,” says Harry Chopra, chief client officer at AxiomSL, the software solution provider that works closely with market participants to support regulatory matters. “Singapore embarked on a rewrite of their core regulatory report.”

“A similar effort is underway in Australia, where they’ve rewritten their entire set of rules – EFS.”

“They’re upgrading their regulatory and reporting requirements,” he says.

12% of the region’s survey respondents said they were less concerned than last year, with the remaining declaring no change. The results are reflected in the year on year expected change in investment in risk and regulatory technologies, with 61% of Asia-Pacific respondents expecting an increase.

Respondents were leaders of regulatory reporting teams, primarily at financial institutions such as corporate investment and consumer banks, asset managers and wealth managers with multi-line businesses.

The survey asked market participants in the Americas, and the results suggested were more suggestive of a stabilized regulatory climate across the continent: 14% said they were more concerned than last year, 29% less concerned, and 57% said there was no change year on year.

“In the Americas, we’ve perhaps seen peak regulations. Financial institutions have scrambled to put their stress tests and financial reports together,” says Chopra. “They’ve sort of ‘gobbled the elephant’ and they’re feeling a little better about it but of course things continue.”

However, the increase in risk and regulatory technology spend in the Asia Pacific region is mirrored in the Americas, with 52% of respondents suggesting their firms will pump more funding into the area.

Over the course of the next three years, respondents in both regions said data analytics would be the main focus of technological investment, big data mining/analytics was the second most popular, ahead of cloud computing and artificial intelligence/machine learning, with application programming interfaces (APIs) following. Blockchain technology investment came in last place.

“Primarily blockchain is a technology for doing transactions,” says Chopra. “People who are doing regulatory reporting want to make sure that when the data arrives for the work that they’re doing, they want the metadata around it, and they want to know where it came from. Blockchain for mainly a focus for those in the middle of a transaction.”

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