|Fears in the US that Asian financial centres would seek to attract investment through soft regulation are ill-founded, according to the outgoing head of Hong Kong’s market watchdog.
In an interview with the Financial Times on Wednesday (June 8), Martin Wheatley said Hong Kong and Singapore’s success in attracting business had nothing to do with “regulatory arbitrage”, in which financial entities target their business towards the most lenient jurisdictions.
Mr Wheatley, who has just finished a six-year stint as head of Hong Kong’s Securities and Futures Commission, was reacting to a speech earlier in the week by US Treasury Secretary Tim Geithner in which he warned Asian markets to follow America’s lead on derivatives regulations.
“The truth is, both Hong Kong and Singapore are putting global regulatory standards in place in exactly the same way as other markets,” said Mr Wheatley, who starts as head of the UK’s new Financial Conduct Authority in September. “The fact that business is coming here is not a question of regulatory arbitrage: it’s a question of growth and opportunity.”
He told the FT that Mr Geithner’s suggestion that the US sets a “gold standard” in financial regulation that other countries should emulate was “nonsense”, pointing out that “the US has lots and lots of gaps in its regulatory structure, many of which are still not addressed.”
Mr Geithner said in his speech that the UK had set a “tragic” example through light touch regulation. US officials worry that uneven regulation of derivatives globally could lead to regulatory arbitrage.
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