Citi-Asia-puts-its-foot-on-the-gas

Asia puts its foot on the gas 3 Having implemented a robust and targeted public health response to COVID-19 during the early stages of the crisis, Asia is on course to see its economies recover faster than many others. In the case of China, positive growth has already returned. The downturns across some of the more developed markets in the region – principally Australia, Korea, Japan and New Zealand – have not been as severe as many initially predicted, and their gross domestic products (GDPs) are expected to rally strongly in 2021 1 . In emerging Asian markets such as India, the economies will likely rebound later this year as well. Despite all of the disruption, a number of Asian countries are continuing to make material improvements to their capital markets through a combination of digitalisation and liberalisation. Digital transformation goes up a gear Even before COVID-19 forced the industry to collectively adopt new digital channels, regulators and financial market infrastructures (FMIs) across Asia had been embracing technological change for some time, and using it as a means to drive efficiencies in post-trade operations. “A number of regulators and FMIs in the region have a long track record of utilising technology to facilitate improvements across the value chain. We see a significantly higher pace of new fintech adoption and platform upgrades across Asia. There is a broader push for a digital infrastructure which is generating good traction in areas like market access, corporate actions and tax,” said Aashish Mishra, Asia Pacific Head of Direct Custody and Clearing at Citi. Automation, for instance, has been widely deployed in activities such as corporate actions and proxy voting in the region. Impressive advancements have been made around e-voting in key markets such as India, Indonesia, Thailand and Taiwan. Indonesia is developing a mechanism to support an electronic initial public offering (IPO) process having introduced e-proxy voting and online AGMs (annual general meetings). Elsewhere, Japan is looking to disseminate meeting information electronically, while Singapore could potentially make virtual AGMs a permanent feature in its local market. Digital enhancements to previously paper-heavy account opening procedures and regulatory authorisation processes have been ongoing for some time too. India has developed an e-KYC process, making it easier for foreign portfolio investors (FPIs) to access the local market. Account openings have also been streamlined in Taiwan through the introduction of the e-request form. More recently, COVID-19 acted as a catalyst for digital transformation, with Asian regulators introducing emergency measures to ensure capital markets continued functioning normally, including allowing the electronic submission and execution of documents. Indonesian authorities, for example, have digitalised the tax documentation requirements for foreign investors. Whereas investors previously needed to provide signed Certificate of Residence/DGT forms, authorities have said they will now accept scanned versions and/or documents with e-signatures from countries which recognise digital signatures. Such efforts have been critical in ensuring markets were resilient to the COVID-19-related disruption. “It is vital that these measures stay in place beyond COVID-19 as they have helped drive greater automation in many APAC countries,” said Mishra. 1 World Economic Forum data