Comments from our January Newsletter

Here is the Comments section of our January Asian regulatory newsletter:

January was a quiet month from a regulatory viewpoint in both Hong Kong and Singapore.

In December in Hong Kong there seemed to be a regulatory bottleneck in getting various applications processed. We noted that this eased in January. 2006 saw a large increase in the number of licensed entities in Hong Kong and we did not detect any decrease in activity as the year came to an end. A major regulatory challenge in 2007 will be ensuring that regulators can attract and retain sufficient expertise to handle both the new entrants and the new products and processes emerging from established firms.

As Hong Kong is still a great place to build and develop financial services, getting new entrants to the market quickly can only be good for the economy in general and the slow speed of application turn around in 2006 was by and large a drag on investment in Hong Kong.

We believe that there will be a temptation to tighten the Singapore regulatory environment in 2007 as such a buoyant economy breeds a little complacency on the business development side of the MAS. This is already being seen in the greater emphasis placed by the MAS on timely notification of changes at both licensed and exempt institutions.

MAS is sending warning letters to licensed individuals who fail to notify them of changes in personal details so internal education campaigns about the importance of these requirements should be commenced.

We believe that taxation on the activities of financial firms in both Singapore and Hong Kong will remain a policy focus in 2007 and proper planning and advice remains critical in this area.

2007 will be the year that many of the new changes in Japanese financial law come into effect. Coupled with the resurgence of the Japanese financial industry and the move towards greater integration of the Tokyo Stock Exchange with the NYSE, this year should be a challenging and exciting year for financial firms in Japan.

China and India are both predicting strong economic growth again in 2007. We expect to see a measured opening up of the Indian regulatory system and further liberalization and internationalization of the Chinese system.

In news outside the Asia Pacific Region, the Guernsey Financial Services Commission (“GFSC”) with regard to closed end funds has introduced a new regime. The process of gaining consent has now been streamlined to 3 days and the closed end funds that have received such consent will be known as “registered” funds.

In order to streamline this process the GFSC has placed reliance on the administration of the fund, requiring some certifications from the promoter and administrator of the fund.

Lastly this newsletter goes out just prior to Chinese New Year. We wish all of our readers a prosperous and healthy year of the pig. For those of you in Hong Kong – Kung Hei Fat Choi, and if you are in Singapore – Gong Xi Fai Cai.