Im often told generally by Americans that Europe is complicated. The alphabet soup of acronyms half of which start with an E is often baffling to those who arent immersed in the detail of European politics.
For all its diversity, Europe does, however, have an advantage in one respect: there is an established framework for regional cooperation. The European Commission the executive branch of the European Union is a focal point for the region. Brussels is Europes version of Washington a highly concentrated cluster of political and regulatory agencies, lobbyists and, inevitably, fine restaurants.
Where is the Brussels/Washington equivalent in Asia? Its a simple answer there isnt one!
Omgeo clients everywhere yearn for some consistency in regulation. It is very unusual for a firm not to have some form of cross-border exposure and therefore have the need to accommodate multiple regulatory structures. Perhaps the timeliest issue in the move towards standardization is in the OTC derivative area. There are positive signs that Europe and the U.S. are aligned we know there is frequent dialogue and cross-fertilization of good ideas. But the OTC markets are truly global and to paraphrase Henry Kissinger who do you call if you want to speak to Asia?
The general view locally is that most Asian markets are hard-wired to be competitive, and the regional forums that exist dont always represent every market due to regional rivalries. G20 members, including the five Asia-Pacific states Australia, China, Indonesia, Japan and South Korea have pledged to implement trade repositories and CCPs for the OTC derivatives market.
Japan has made a start by implementing new regulations, but they only apply to the Japanese market.
Without some cooperative program, global and regional firms face the daunting prospect of trade repositories and CCPs being created for each market. However, if you speak to local players there are glimmers of hope many Asian markets simply arent large enough to build local infrastructure they will likely adopt foreign infrastructures instead.
Longer term, many people say openly that China will assert its dominance. Its rapidly developing capital markets are beginning to have an overseas presence. As an emerging superpower, it may be able to project its influence in financial regulation in the same way as it has done in manufacturing and natural resources. With a huge Chinese origin diaspora throughout the Asian region, it is naturally regarded as a leader.
A 14-year-old nephew of mine is busy studying Mandarin. Sounds like a smart move.