ComplianceAsia opens Shanghai office on high demand

People visit the Bund in front of Shanghai's financial district of Pudong in Shanghai, March 28, 2018. [Photo/VCG]

Independent compliance consulting firm ComplianceAsia announced the opening of its first Chinese mainland office in Shanghai on Monday, addressing the market's rising demand for compliance advice.

According to CEO Philippa Allen, the consulting firm will be providing services covering rules and regulations, policies, procedures, regulatory filings, compliance training and general advice in other countries when Chinese mainland financial institutions enter new markets.

Allen said, prior to the opening of the Shanghai office, ComplianceAsia already had a large number of Chinese mainland clients with operations outside China, as well as international companies with plans to move into China. But such operations used to be conducted via its Hong Kong office.

She said international institutions are willing to set up large offices in China following the financial opening-up policies announced by the central bank in mid-April, as well as the increased quota for qualified domestic investment enterprises and qualified domestic limited partners to invest abroad. Large international companies are also establishing more private equity businesses in China because of the country's Belt and Road Initiative, she said.

With all these policies combined, Allen said "the timing is perfect" to open the Shanghai office.

According to Alex Duperouzel, managing director of ComplianceAsia who will head the Shanghai office, the inclusion of A shares in the MSCI emerging market index will also drive the company's business in the Chinese mainland, as more institutional investment will flow into the market.

"With the capital inflow, companies want to ensure their internal control environment is appropriate and abides by local rules regarding what they can and cannot do in relation to trading," he said.

Duperouzel said Chinese regulators' tightened control of the financial markets over the past two years will boost demand for compliance consulting services.

International recruitment agency Morgan McKinley wrote in its annual report that 2017 marked the year of regulation and compliance in China. China Banking and Insurance Regulatory Commission is highly recommending that banks increase their force and headcount in compliance. Therefore, demand for experienced professionals will continue to increase in all financial institution sectors, according to recruitment experts from Morgan McKinley.

Allen said that China is not the only country seeing tightened financial regulation, as there are many more rules and regulations in place globally after the 2008 financial crisis. Regulators globally would act similarly to protect investors and the market, she said.

She said Chinese mainland regulators have taken action against collusion, insider dealing and front-running a stock, in addition to improving information disclosure.

While China takes the lead worldwide in online finance, there might be potential compliance risks as to information disclosure, the method of gauging product buyers' risk tolerance and access to personal information, Allen said.