Commentary

A new wave of fitness training for investment operations is getting underway. Straight Through Processing (STP) systems achieved a certain level of effectiveness over the last 20 years, but they have been thrown a new set of challenges in recent months. These challenges will inadvertently cause a wholesale review of operating models in asset management business worldwide. With the increasing demand from securities firms for end-to-end STP reviews, SWIFT’s rapidly-growing consulting unit has developed some insight in response to this trend.

You would have thought we’d have gotten further Ever since the East India Companies of the 17th century, business around the world has been growing more and more international. Customer and supplier relationships are to an ever increasing extent occurring across the borders, often with very broad patterns linking into several markets, the result of modern multinational corporations.

In the aftermath of the global financial crisis, compensation practices in the Financial Services industry have come under significant scrutiny by regulators and politicians, particularly in Europe and the US. The Financial Stability Board (FSB) and the Committee of European Banking Supervisors (CEBS) have been at the forefront of issuing a series of implementation standards on compensation with the ultimate goal of designing appropriate incentive structures that seek to align bankers’ compensation to the nature and degree of risks undertaken.

Throughout the last two quarters, most hiring managers in banks were grappling with multiple offers and counter offers, thinking the worst of them.

The compensation landscape at financial institutions is undergoing dramatic change. New approaches to remuneration are being implemented to comply with changing regulations and drive long-term business success.

The banking industry has been getting a bad wrap in recent times, but is this scrutiny justified, and is working in banking now radically different to what it was when the industry afforded a much better reputation? Furthermore, are quality candidates really turning their back on the banking sector to pursue careers in seemingly more attractive industries?

Coface conducted a corporate credit risk management survey in China, in the fourth quarter of 2010. Over 1000 companies in mainland China participated in the survey. It reveals that great improvement in both credit sales and overdue payment among mainland China companies has been observed in industries such as building & construction, textile and clothing, automotive/transportation and household electric/electronics, which is largely due to the government’s stimulus package after over 1 year’s implementation. But this might not necessarily be good news for Singaporean companies intending to extend their businesses to mainland China. The survey also revealed enterprise’ concern on 2011 economic outlook. Thanks to the high cost of raw material, industries such as building and construction, textile and clothing might face difficulties in the coming year. In the meanwhile, on the threshold of a new Five-Year Plan, the Chinese government will implement a new stimulus package, subsequently lead to a shift of the preferential policies among different industries, making the investment landscape in China a different story. The 12th Five-Year Plan will be implemented in 2011. More than 4 trillion Yuan will be spent in the coming five-year period to provide financial support, including tax cuts and exemptions, to nine key industries - new energy, new materials, information technology, biology and new medicine, energy conservation and environmental protection, aerospace, marine, advanced manufacturing, and hi-tech services industries. The government aims to shift China from “the global factory” to “the global market”. Therefore, the new plan accents on creativity and advanced technology, to help Chinese companies depend less on foreign technology. Companies with a focus on advanced technology rather than the traditional outsourcing manufacturing model will enjoy more benefits from the new Five-Year Plan.

The proliferation of mobile devices and the growth in online tools and networks has been well documented, and the financial services industry has not been immune to this trend with an estimated 400 million people utilizing some form of mobile financial transaction within the next three years. Given this aggressive growth in digital financial services, l institutions that are embracing and shifting to digital channels for reasons of cost and better customer management must make security the centerpiece of any successful digital strategy.

Companies across Asia are seeing significant increases in the amount of cash they are holding.

According to a recent joint KPMG and Oracle survey of executives from financial institutions across the region, the recently proposed reforms Basel III are likely to have a significant impact on banks in Asia-Pacific. About three in four, or 76 percent of respondents said regulatory reforms would have an impact on their business. More than half said these regulatory reforms would likely mean changes to their banks' business models. Almost half or 48 percent expect their banks would need to raise additional capital.

Rebalancing growth

As part of the Australian Government’s review of the taxation treatment of collective investment vehicles, the Board of Taxation has issued a comprehensive discussion paper for comment on how to enhance the competitiveness of the tax regime for Australian investment funds.

Schroders and Legal & General Investment Management are actively involved with a number of brokers in developing a local confirmation-affirmation allocation capability over SWIFT

What a year 2010 has been, and for very different reasons for different parts of the global landscape.

In October 2010, KPMG wrote about the new agenda for Islamic finance institutions globally and three months on, we would like to examine how the industry has fared specifically on a number of areas that were discussed.

The Year of the Rabbit will be a year with quite a lot of attention on accounting standards, particularly financial instruments accounting.