Growing capital markets in Asia - how ASIFMA is driving change

Urszula: I’m so delighted to be talking to you today.  We've worked for a number of years together and I’ve had the greatest privilege of seeing how critical the work of ASIFMA is.  Could you please talk listeners through the role of ASIFMA.

Laurence: Thanks Urszula for inviting me to join this conversation.  ASIFMA is the Asia region’s largest capital markets trade association.  Our mission is really to develop deep and liquid capital markets in the region and we do that by bringing together the buy side, the sell side, the wider capital markets ecosystem and really form a consensus view on issues that are critical to capital market development and then engage with the regulatory authorities in the key jurisdictions on those.

Urszula: And Laurence, in terms of the buy, sell side, other participants, what sort of members participate in ASIFMA?

Laurence: We really bring together all the large capital markets players, so that’s buy and sell side.  We have over 50 sell side members, over 30 buy side members, and that's really the large international players, the main US, UK and Australia firms, but also an increasing number of regional players as well.  We have some Chinese players joining us, ASEAN players as well.  Interestingly, we’re adding a number of tech players so we have some global cloud providers who’ve joined us, some digital asset exchanges.  We really aim to bring together the entire ecosystem.

Urszula: And we’ve, also we enjoy participating.  What do you see as the role of the professional firms that join?

Laurence: They’ve been key stakeholders for us. They really, very often they can bring a more holistic perspective based on the views from a number of clients that they’re working with. Very often, we work on complicated matters, complicated circulars and their guidance and advice and expertise is instrumental. KWM has been an incredible contributor to a lot of the work we’ve been doing in terms of consultation responses, thought leadership pieces, so it’s been great to have the professional firms on board.

Urszula: Well that’s very kind and I promise I wasn’t fishing there.  What I wanted to talk to you about was really around change.  We’ve all seen the acceleration of technological deployment, but we’ve now seen it really move from this niche area or back-end area but right into the mainstream.  I’ve watched as it’s really now very much becoming part of the core value proposition for financial institutions - how they do business, what solutions they offer.  How has that changed ASIFMA’s work over those years?

Laurence: You’re absolutely right.  The tech and digitisation agenda is an increasingly important priority for ASIFMA and for its members.  When I joined in 2016, we were doing some work on that front around the edges, but now as you say, it’s really the core of what a lot of our members are looking at.  So we really look at digitisation of markets holistically but also in terms of the tech foundation and the pillars that will actually make it happen.  For example, public cloud.  That’s really a foundational building block for firms to be able to leverage public cloud.  So we’re engaging with many regulators in the region to make them feel comfortable and allow them and make sure they allow their regulated entities to use the cloud and benefit from all the innovation that that can bring. 

Tokenisation is another example.  We were really one of the first associations looking into it.  Two years ago we published a tokenisation 101 paper that was very well received from a capital markets perspective, and we are really now looking at what has happened since, what does that mean for capital markets, what is the role that the different stakeholders in the ecosystem will play, what does it mean for democratisation of capital markets, etc.  And really working through the remaining technical, regulatory, ecosystem barriers that need to be addressed to move the needle in the tokenisation space. 

And then more generally on digitisation, we work closely with the regulators in the region to really work constructively with them to address any concerns that they may have around use of new technology in a balanced way that doesn’t hinder innovation.  So, it’s a huge priority for ASIFMA and that will remain so for the foreseeable future.

Urszula: Is part of that trying to recognise the difference of views on these topics?  Because you’ve got a really wide member base and sometimes those interests aren’t necessarily aligned.

Laurence: Yeah, surprisingly, on most topics the interests amongst the members, at least on the high-level advocacy points, they’re actually more aligned than perhaps one would think.  But it’s really those principles open the door to a constructive conversation with regulators around how we think AI should or shouldn’t be regulated, how we think they should go about regulating or not regulating cloud, etc.  So you’re right, they are quite high level but it’s always a good way to start the conversation and drive conversions and harmonisation among regulators as well.

Urszula: I’m going to loop back to some of these specific areas because you’ve had some really big wins in areas that are really hard.  But I want to talk a little bit about you and your role within ASIFMA.  Talk us through a day in the life of Laurence Van Der Loo.

Laurence: It’s very broad and very diverse, which I really like.  Really no two days are the same both in terms of the kind of work that we do and the range of topics that I cover.  It’s really frequently changing and ranging from Ops, KYC, cyber, business continuity to the India advocacy that we do.  So at ASIFMA and me personally what we do is we respond to consultation papers, so if a regulator comes out with a consultation paper, we get all our members on calls, seek their feedback and then distil that into a consensus view that we then take back to the regulators.  We also proactively engage regulators and central banks in the region.  Now in Singapore I’m also hoping to attract more ASEAN firms to join ASIFMA, so I’m having a lot of conversations with potential members as well.  We organise a lot of conferences and we help build content for that. We represent our members and ASIFMA at public forums.  We draft thought leadership pieces and lastly we help our members implement new regulations.  So once the consultation phase is done and the new rule is out, we sit down with our members and allow them to share best practices amongst each other, see if there’s any implementation challenges we need to take back to the regulator, etc.  So it’s very broad, which is great.

Urszula: A huge remit.  And I really liked the way in which the follow-up on the tokenised securities paper worked.  It was really practical.  It was very much: where are we, what’s ahead, how is this actually born out in practice.  It’s evident that it’s really not just a one-off on some of these projects at all. 

So you were in Hong Kong five and half years, now you’re in Singapore.  What do you see as the role of ASEAN in that broader global question of harmonisation, of at least high-level alignment? 

Laurence: I’m really excited to be here and excited about opening an office here in Singapore.  We’ve always been a regional association covering all the key Asian markets including Singapore and ASEAN from Hong Kong.  But really by having an office here, we will make sure we are closer connected to the local ecosystem and explore how we can add more value in ASEAN.  China and India are very much still our key priorities for members.  But we see that there is a lot of traction in some of the larger ASEAN jurisdictions as well and by being in Singapore that will very much help us to be closer connected to potential members here, the regulators in the region, the other associations to help move the needle.  ASEAN is interesting.  On many aspects, historically they’ve been followers.  But it’s now interesting to see that, on some topics, for example CBDCs, some of them are actually starting to take the lead, which is quite exciting.  So it’s a good time to engage with them.

Urszula: Well you know I couldn’t agree more on that point.  We’re starting to see jurisdictions that are contemplating smart contracts in the digital equivalence legislation, that digitalising government at pace, it’s just incredible.  And so I couldn’t agree with you more.  And often poorly understood in many other places, just how fast that adoption is going and how sophisticated the thinking is. 

I want to talk about China.  There was a particular win that you had in China.  Can you tell us about the landmark change there that you helped achieve that’s helped incoming foreign operators to compete there on a more level playing field?

Laurence: Oh yeah definitely.  That was a huge win and one that we’re continuing to engage on.  Accessing and operating in the China market is really a key priority for ASIFMA and its members.  And China’s markets, they continue to open up and it’s really exciting to be part of that journey and to have contributed to that journey.  What we’ve done over the last couple of years, we’ve really successfully engaged with the relevant authorities, the regulators, the exchanges.  And so now firms can apply for full control of their businesses in China up to 100%, whilst before - advice, securities firms, fund managers etc - they were only allowed to own up to 49% of their joint venture.  Now they can have 100% and then now the next step is really how do we continue to work on leveling the playing field in terms of licences, so that international firms can actually compete in China on an equal footing.  And then on the investment channel side, we stock connect, bond connect, we’ve been very involved and worked with the exchanges and the authorities on those to really further smooth those channels and smooth for investments in China.

Urszula: Amazing.  And I’m going to ask you about your secret sauce in a moment, but I am first going to talk to you about an area of change also that was a huge win and that was in Hong Kong.  To set the scene, we had proposals, actually effectively live, that would limit how financial institutions that were regulated, how they used external service providers for their data storage and that would effectively limit cloud use unless the providers agreed to share data with the regulator when needed.  That obviously came with a lot of controversy and on the flip side it was also hard for the regulator that wants to be able to access data when, in the hardest of circumstances, when someone’s not complying.  I’m going to be very honest, I thought that was a hopeless cause.  I thought the providers are going to have to agree or bow to commercial pressure or they were just going to have to localise.  And it really seemed like there was no hope.  It was a long process.  But you succeeded.  Can you talk us through that one.

Laurence: Yeah, we obviously we did end up in a very good place but that was after two years, or over two years of engagement with the SFC, our members, etc.  We tried to understand, okay what is the SFC trying to achieve, how can we accommodate for that, how can we work with the cloud providers so they can support the industry to accommodate for those concerns.  And then come up with a solution that is workable for the industry to implement but also makes the SFC comfortable in discharging their regulatory and supervisory obligations. 

We ended up with a very good compromise.  The SFC will receive the information and the comfort that they need and firms, by making some tweaks to the way they engage with the CSPs, if the LCs know exactly where the data is stored and they have a manager in charge so a person that confirms to the SFC that they will guide the SFC to the data that they need, then that’s efficient.  So really I think we landed in a pretty good space there after a very lengthy process.

Urszula: It sure was.  Okay, so I promised to talk about your secret sauce, so I’m going to talk about your secret sauce.  So, what makes a successful submission, a successful lobbying effort?  You’ve touched upon the need to understand what the regulators’ aims are.  Talk us through your process.  What’s worked well?  What hasn’t worked well?

Laurence: That’s really the key, really trying to understand what the intention behind the regulators’ regulation is and what their concern is.  Always be constructive, I think that’s the second thing I learned along the way.  Broad and engagement with regulators, but also with members and then really trying to find that consensus view, which is so much more powerful than submitting a split view of the industry.  And usually we really achieve that.  We find the consensus view that we can then really take back to the regulators on behalf of the wider membership.  And also come up with, I’d say if there’s really something that we’re concerned about that we think will not work or is too restrictive etc, it’s coming up with a constructive counter-suggestion that we think will work, but also addresses their concerns rather than just pushing back.  And I’d say perhaps lastly in the region, what is also important, certainly in the more developing jurisdictions, is really pointing to examples in other jurisdictions like the US and the EU, again to make sure that international standards are applied here in the region and there’s no more fragmentation than needed in the region as well.

Urszula: And then, speaking about that harmonisation, what is it about, in capital markets, harmonisation of capital markets, what is it about that that really drives you?

Laurence: It’s a good question and everything about it, actually.  Really capital markets development in the region, there’s so much to do still here.  Businesses in Asia, they still very much rely on bank funding in a lot of jurisdictions, certainly compared, if you compare it for example with the US.  There’s opportunities here in Asia. 

Developing the capital markets will really allow Asian businesses to grow, fund Asia’s ambitious plans for infrastructure and ESG.  It will give Asian investors and savers access to a wider range of investment possibilities and it’s really key to develop Asia’s capital markets to achieve all of that and to complement the current bank lending model.  So being part of that journey is really great and then achieving the smaller, bigger, short-term, longer-term successes and really feel you can make a difference, is really motivating.  And Asia has a very diverse range of markets.  We have, as I mentioned, the more developing jurisdictions but on the other end of the spectrum there’s Hong Kong and Singapore that are really international IFCs.  And that entire spectrum of jurisdictions, each come with their own challenges and opportunities, so it’s a very interesting space and area of the world to work in.

Urszula: Wonderful.  And so here you are, kicking all these goals.  Before we finish, I want to take a moment to reflect on your journey to this role, via previous roles at Vista and Hong Kong, helping funds set up in Asia and ING and Brussels.  Is that the path you expected when you were studying for your Masters degrees - and I think people need to know that you have two of them - are there any career turning points or highlights you can share with us?

Laurence: I didn’t have a clear-cut path and I definitely had a very rigid plan that I wanted to execute when I graduated and it’s really why I chose initially for a management traineeship at ING, which was a great opportunity because it then exposed me in two years to all the various business lines.  Through that journey it became quite clear to me quite quickly by learning that capital markets and corporate banking are really, that the institutional space was really, the areas that I wanted to continue in.  But then as I said my part wasn’t really a traditional one. 

Also life happens.  You want to move countries. You decide to move with your partner so all of that happens and then moving to Hong Kong 9 years ago was clearly a turning point.  I completely switched gears in terms of industry.  Really honestly just because of the opportunities that were given to me and I just jumped on it.  Then I really wanted to go back after Vistra. I really felt like I wanted to go back to the financial industry and I jumped on the opportunity when I was able and was allowed to join and invited to join ASIFMA. I have switched gears a number of times and I would just consider… everybody should just consider to search until you find the role that you are passionate about and not give up but in the meantime really always do your best and give everything you have in every role on the way. And I’m very curious whether what my path will take me over the next 10/20 years.

Urszula: Oh absolutely and just the state of play in that time I imagine. It’s so evident that you’ve embraced this change. In the most recent working group meetings it’s really evident that you know the evolution of ASIFMA’s role, your role.  It’s just been absolutely dramatic and wonderful so saying yes to things seems to have been a good strategy.

Urszula: Finally tell me what are you listening to or watching at the moment.  What’s keeping you grounded outside of work?

Laurence: I’m a reader so I don't watch many things. I already spend way too much time in front of a screen so the book I’m reading at the moment which I would definitely recommend to everyone is the Eighth Life and its by Nino Haratischvili. It’s really a phenomenal novel so the Eight Life really tells the story of I think 7 or 8 generations spanning the twentieth century in Georgia. I definitely recommend it to everybody and quite relaxing as well.

Urszula: Thank you for the recommendation.  And it’s been an absolute pleasure to speak today to catch up, to hear about that journey.  So thank you so much for your time.  Absolutely fascinating.

Laurence          You are most welcome and thanks for giving me the opportunity.