New European guidelines may hit Asian banks

Medium-sized companies will take the most impact.

As the second Markets in Financial Instruments Directive (MiFID II) take effect on January 3, 2018 in Europe, analysts note that the Asian financial services sector may also be affected, especially medium-sized companies in Asia.

In a report by the South China Morning Post, senior partner for financial services in Asia Pacific at EY in Hong Kong Keith Pogson said, "The rules are not specifically intended to be extraterritorial – European regulators are bringing in new rules for European companies – but they will still have an impact.”

Asian companies will have to abide by MiFID II rules if they trade in European securities or when they do business with European clients and counterparties.

Pogson adds, “The large international banks and asset managers have MiFID II implementation programmes including Asia that they have been putting into place over the past 18 months or so. Firms that are very focused on the region, say most Chinese brokers that primarily trade Chinese securities for Chinese clients, will probably not find it worth their whilst to trade European assets, so it will be the companies in the middle that will have greater difficulties.”