FINRA and SFC Sign MoU Amid Decline for Banker’s Expat Perks in Hong Kong

FINRA and SFC agree on cross-border synergy amid other trends evident in Hong Kong.

The Financial Industry Regulatory Authority (FINRA), a United States non-government self-regulatory organization (SRO), has entered into a memorandum of understanding (MoU) with Hong Kong’s Securities and Futures Commission (SFC), in order to enhance mutual oversight of cross-border regulated entities, as per an SFC announcement.

The MoU came into effect on May 9th, 2016, and aims to improve the supervision and oversight of regulated entities that operate on a cross-border basis in the US and Hong Kong, and covers financial services companies that are regulated either by the SFC or FINRA. The news comes barely a week after SFC’s CEO Ashley Alder became IOSCO’s new Chairman of the board.

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Cross-border regulatory synergy

The definition of a cross-border regulated entity includes firms that are regulated in one jurisdiction yet are a related corporation to an entity regulated in the other jurisdiction.

Such ties can be common across financial services companies that have multiple subsidiaries, affiliates or entities with the similar or common ownership – among other structures – whether under a parent or group company. Often staff in the home country may be assigned or relocated to work in other parts of the world where the organization has a presence, such as in Hong Kong for U.S. firms, and vice versa.

The SFC and FINRA are willing to cooperate based on the MoU, in the interest of upholding their respective mandates with regard to rules in each regulator’s home jurisdiction, and as such agreements become more common amidst a growing globalization of the world’s financial markets.

Savvy expat package no more

In a related article about financial services in Hong Kong today, a story by Bloomberg implied that expat packages – or the additional compensation that is given to workers who relocate abroad – is becoming a thing of the past after falling 30% in the last four years.

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A reason for this decline could be that while relocating to a foreign country in the past was considered a difficult and complex task – justifying the additional expense – the prospects of relocating to a financial hub in Asia – such as Hong Kong – has become more appealing for financial services professionals, or maybe it’s because of something else other than an abundance of workers willing to relocate to the pretty island.

Relocation perks under scrutiny

It could be a return to normal for pricing – between the value of a currency that an employee is paid in from the foreign company (i.e. in USD, GBP, EUR), compared to how far that currency can go in the new location where the staff member has relocated to – in this case Hong Kong – which despite some sharp volatility has traded within a tight range in the last five years.

Nonetheless, as the appeal for remote workers and those relocating to countries where their local salaries can go far, the housing perk for Hong Kong expats in financial services appears to be shrinking fast.

Conversely, one can live quite comfortably in parts of Asia where within a country there can be many concurrent economies of scale, spanning from a micro-economy all the way up to the ultra-luxurious for the super-wealthy, where the same meal at one restaurant – for example – could cost as little as 1/50th the price when compared to another fine dining establishment (similar comparisons can be made for housing).

The Bloomberg article noted that the perks that went along with such hefty expat housing packages are being cut and the days of ‘marble jacuzzis, private gardens and killer views’ are being downsized for more realistic conditions. If such a trend is reflective of a broader change in the region, other major financial hubs in Asia – such as Singapore – could be witnessing a similar effect.

 

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