Welcome
…to the 54th Edition of House. A belated Kung Hei Fat Choi 恭喜發財! to each and every one of you! We hope you had a wonderful new year home with your families.
Now that the festive season is well behind is, it is time worked picked up across all sectors of finance, with compliance and regulatory functions not lagging far behind. We are expecting to face a busy year going forward, and if 2020 is anything like the year before, expect to see a LOT of hiring take place….
Over the past calendar year, we have continued to see compliance grow in importance across the financial services industry, with hiring rising most significantly across buy side firms, whom attempt to best come to grips with evolving regulatory practices, and the rise in international standards and expectations.
In 2019 we saw Invesco, Pimco, Nuveen, DWS Group, Citadel, Janus Henderson and BlackRock all hire Senior Directors or Regional Leads in Compliance and Legal. And the hiring hasn’t stopped in 2020 with a very significant move in May Li who has joined Fidelity from First State Investments as the new APAC Head of Compliance.
The sell side too, have documented a significant rise in compliance hiring, as regulatory bodies such as the HKMA, MAS and SFC attempt to implement whole-scale changes across the entire spectrum. 2019 saw multiple note worthy moves along these lines, some of which included Lily Wang’s move to JPMorgan Chase in Hong Kong, and Dinesh Sadarangani’s new role as APAC Head of Compliance at BAML.
Yet in spite of what appeared to be at best an eventful final few months of 2019, APAC regulators have reassured retail investors and analysts alike of the stability and security of the banking sector, despite a challenging and ever-changing regulatory environment.
What we can guarantee, however, is a surge in hiring going forward. As compliance teams continue to grow in importance and size, the demand to up skill talent is higher than ever, espessially when considering the continued emphasis towards the stricter implementation of regulatory procedures in 2020….
Tech in 2020 - The Importance of Cyber Hiring…
The HKMA and MAS issued distinctive warnings in their respective end of years reviews, regarding the rise in both complexity and effectiveness of cyber-attacks. Regulators across the world of finance are confident in their assertion that cyber threats pose arguably the greatest threat to banks going forward, so much so that they are confident profits along with customer trust may see a significant drop unless this threat is fully rectified...
The international regulatory stance towards the importance of the implementation of a concrete cyber security framework within any organisation, is a keen indicator that ‘cyber compliance’ will undergo exponential growth, not just in Asia but across the globe. Chicago based market-intelligence firm, Numerator’s, recent hire of Mohit Kalra as their General Counsel and Chief Privacy from Google, is surely a testament to this trend going forward…
Regulatory experts across Hong Kong’s banking sector have stressed the importance of the far closer supervision of virtual banking to avoid any incoming cyber threats therein. Their continued emphasis on addressing such threats alludes to the rise in demand on FinTech Compliance experts over the next year and beyond, to ensure the implementation of smooth and conflict free procedures, to oversee the coming together of high finance and information technology…
Wealth Management Compliance from 2020…
As per hiring within the buy side, the regulatory direction in which banks are headed across the APAC sector has proven abundantly clear.
While their collective imperative is to continue to align with and potentially adapt to global AML and CTF practices, regulators have hinted at the need for a thorough restructuring, maintenance and expansion of credit risk and wealth management practices, which could imply the continued trend of buy-side hiring over the next year…
Compliance teams within relevant organisations have been made fully aware that the several weaknesses within global operating environments, paired with lapses in risk management standards could pose substantial risks to overall profitability.
As a means of countering these risks, sanctions compliances is a branch of expertise that may well grow in demand over the upcoming months, along with candidates with a proven track record in thoroughly implementing data driven, technology enabled AML systems.
Furthermore, APAC regulators in particular have highlighted the importance of stress tests to both identify and quantify and such risks, and perhaps most importantly to develop contingency plans.
To supplement these measures, firms on both the buy and sell side, will be expected to carry out far more thorough reviews on asset quality, create and/or implement more effective wealth management platforms, while intensifying their supervision of any foreign currency liquidity risk.
APAC ESG in 2020…
Prior to the year 2018, it is safe to say that Environmental and Social Governance (ESG) had yet to emerge as a topic of substantial importance within compliance, yet has recently emerged as a sector of great relevance to regulation and finance as a whole…
Regulators across the Asia Pacific region are incredibly keen to promote ESG within the private sector, all the while urging institutions (particularly in India and Greater China) to adopt internationally approved compliance procedures to do so…
Their intentions are to create a far more effective means to conduct assessments and examinations upon an organisations readiness to comply with ESG standards, yet have suggested their distinctive lack of relevant expertise, given the lack of attention previously allotted to environmental matters…
We believe this to be a precursor for regulators setting far stricter supervisory requirements upon financial institutions, and expect to see a rise in demand for candidates with an understanding of potential market obstacles, and regulatory solutions specific to ESG compliance.
As of 2020, Forbes estimated ESG investment to cover in excess of US$20 Trillion in AUM, which leads us to question whether we will see the rise of ESG specific consultancies this decade…
EMEA, and recruitment post-Brexit…
While most of us have been relentlessly stressing ourselves out over Brexit, the general regulatory stance in the United Kingdom since it was made official, is one of relative calm. The FCA have made it abundantly clear that they prepared to cope with whatever outcome Brexit throws at them, and have reassured retail investors and regulators alike, that British regulation will continue to closely mirror EU regulation, at least for the foreseeable future.
The FCA is expected to, for the most part, continue to comply with EU laws until at least December 2020, by which time they are expected to have drafted a list of rule alterations, for widespread use. Till then, the ‘shared regulation’ covers issues pertaining to AML Procedures, Financial Innovation, and the future regulation of Digital, or more specifically ‘Crypto’ Assets.
Having said that, there is likely to be a surge in recruitment within Compliance and Legal positions in the UK going forward…
For staters, we can safely assume there will be a rise in demand for Compliance professionals with a background in Equities, Derivates and Retail Structured Products, seeing as Brexit will almost certainly limit investor options to EU consumers, leading to a decline in trading. Whats more, the limited flow of data between the UK and EU will put consumers at risk of being unable to access products that they use on a daily basis, which brings to light the need for candidates on the Cyber Crime and Legal Side, along with professionals whom have previously served within a supervisory capacity at a Regulator.
British regulation going forward will also look closely at supervising and tackling the multitude of new challenges brought about the widespread emergence of digital assets. Last year, upwards of US$2.3 Billion of Bitcoin is said to have been laundered through exchanges in the United Kingdom…so expect a massive demand for Crypto Compliance officers across the region….
News from across the pond…
Recently passed SEC regulation will warrant a demand for compliance officials on the Buy-Side, particularly those with experience in conflict management at large-scale Registered Investment Advisors (RIA’s). Last year, the total Office of Compliance Inspections and Examinations (OCIE) Investigations into buy-side firms rose to 13,745, compared to 11,500 across 2018-19. In the same time, the total AUM under US RIA’s role from US$ 64 Trillion, to US$ 84 Trillion…
Furthermore, the demand for AML and Cyber Crime experts is expected to rise across the Americas; a trend we expect to carry on worldwide, given the emergence of new and more complicated threats to finance, that many of us probably wouldn’t have ever considered a decade or so ago…