January 16, 2017

RHTLaw Taylor Wessing Family & Matrimonial Partner Michelle Woodworth commented on the expected child maintenance guidelines for next year in an article published by The Straits Times

RHTLaw Taylor Wessing’s Family & Matrimonial Partner Michelle Woodworth was featured in The Straits Times article titled “New guidelines on child maintenance expected next year”. The article was first published in The Straits Times dated 16 January 2017. New guidelines on child maintenance expected next year Expected next year, they're based on actuarial data and may hasten closure of divorce cases Source: The Straits Times © Singapore Press Holdings Ltd. Date: 16 January 2017 Author: Priscilla Goy Divorcing parents will have a better idea of how much they need to pay for child maintenance, when guidelines for this are expected to be released by early next year. The guidelines will be based on actuarial data on family expenses, giving family lawyers and judges a more objective view of how much is needed to raise a child. Currently, there are no such rules; information on children's living expenses is declared - and often inflated - by divorcing parties. With the move, lawyers expect divorce cases to be settled more quickly as the issue of child maintenance is one of the most acrimonious. The guidelines will be set by a panel co-chaired by Mr Gerard Ee, president of the Institute of Singapore Chartered Accountants, and Judicial Commissioner Valerie Thean. Mr Ee said these guidelines will include a table suggesting different maintenance amounts depending on two factors: the child's age and parents' income. "These factors have always been considered in divorce cases but there was no actuarial template to refer to," he added. Having such guidelines will "help improve consistency and cost-effectiveness" in divorce cases involving children, said Chief Justice Sundaresh Menon last week at the opening of the legal year, when he announced the setting up of the panel. Countries with child maintenance guidelines include Germany, Canada and Australia. The table Mr Ee mentioned is similar to Germany's Dusseldorf Table, which has been updated nearly every year for the past decade. Mr Ee said the one in Singapore will be refreshed regularly too, to reflect changes in living costs. The move comes amid a rising number of break-ups, though the divorce rate has been stable. The latest available data shows there were 7,120 divorces in 2015, a rise of 11 per cent from the number in 2005. Family lawyers welcomed the move, with some saying child maintenance is one of the most rancorous issues argued about in court as there are inconsistencies over how much is needed to raise a child. Said Mr Rajan Chettiar: "Often, the father thinks the mother is deliberately inflating the child's expenses to get more maintenance, and worries that the mother will spend the extra money on herself." Ms Gloria James agreed that many divorcing parties inflate expenses, citing a case in which the court's view of the children's monthly expenses was about $1,300 less than what the mother had argued for. The mother had included items like "staycations", "photography" and "birthday parties". Ms Sharanjit Kaur said judges face an "uphill task" in assessing the average cost of living for children owing to changing expectations and needs."The cost of living for children has changed significantly, with parents spending more on things like enrichment classes." Currently, parents must give evidence such as receipts for expenses incurred by the child. Lawyers Ivan Cheong and Michelle Woodworth said the guidelines could lead to divorce cases being closed more quickly. This will also reduce parents' legal costs. Mr Ee said the panel will consult other lawyers on the guidelines, and possibly the public later this year.
January 13, 2017

RHTLaw Taylor Wessing Partner (Foreign Lawyer) Mark Jacobsen shared his views on how the MiFID II will affect asset managers in Asia in an article published by Thomson Reuters

RHTLaw Taylor Wessing’s Partner (Foreign Lawyer) Mark Jacobsen was featured in an article published in Thomson Reuters titled “Asian financial institutions seek to understand MiFID II impact”. The article was first published on Thomson Reuters Accelus Regulatory Intelligence and Compliance Complete. Source: Copyright © Thomson Reuters 2017 Date: 13 January 2017 Author: Patricia Lee Asian financial institutions seek to understand MiFID II impact Asian financial institutions are finally waking up to the reality that they could be caught by MiFID II if they offer products and services to clients with a link to the European Union, including executing trades on EU venues. The EU Markets in Financial Instruments Directive (MiFID II) regulates firms which provide services to clients linked to financial instruments including shares, bonds, units in collective investment schemes and derivatives, and the venues where those instruments are traded. Keith Pogson, senior partner, financial services at EY in Hong Kong, said MiFID II was mainly about protecting investors, specifically retail investors, while ensuring there was fair play in the market, including best execution, responsible trading activity and avoiding conflicts of interest. Clients, products, infrastructures The initial thinking that MiFID II will only affect financial institutions in Europe has proved to be a misconception; its extraterritorial effects will also be felt outside Europe. How MiFID II will affect financial institutions, Pogson said, needs to be examined from three points of nexus: clients, products and infrastructures. For instance, an Asian financial institution with European clients, an Asian financial institution whose Asian clients purchase European financial instruments and an Asian bank which appoints a European broker to execute a trade will all, in some way, be caught by MiFID II. "Depending on the relationship between the Asian bank and the European broker, the latter may have to go through MiFID II. To the Asian bank, there is direct impact from MiFID II and it has to do with the customer due diligence component, but because it is not directly the market participant, its counterparty, in this case the European broker, will have to have best execution because it is the market participant," he said. Similarly, when financial instruments such as derivatives or bonds in Asia are settled through a clearing house in Europe, the Asian financial institutions involved in the trade will need to comply with MiFID II because these are considered capital market activities in the euro zone. Pogson said it is difficult to ascertain at this stage how MiFID II will affect Asian financial institutions given that the legislation is still evolving and the proposed rules continue to change. "That's a form of frustration for market practitioners. Those who hope that they don't get impacted by MiFID II are hoping that the rules will change or, if not, there's a third route, i.e., taking the smallest impact by trying to stay outside the requirements of MiFID II as much as their business allows," he said. Impact on Asian banks MIFID II will affect both the internal and external processes of Asian financial institutions. Internally, Asian financial institutions will be required to review their processes and fulfil trade reporting obligations. Externally, financial institutions will need to conduct customer due diligence, ensure product suitability and carry out best execution. The impact of MiFID II on many Asian banks, such as Malaysian or Thai banks, is likely to be minimal compared with the effect it will have on large international financial institutions, Pogson said. Private banking will be the biggest area where Asian banks will be hit by MiFID II, and one of the most challenging areas insofar as dealing with clients is concerned, he said. For European banks, the effect of MiFID II will be felt largely in the financial markets involving investment banking and derivatives activities, for instance. Determining the level of protection To help them determine the level of protection they need to accord their customers as required by MiFID II, Asian banks will be required to undertake a fair amount of due diligence including evaluating product suitability, Pogson said. But a feature known as "opt up" under MiFID II, which allows banks' customers to become market professionals, i.e., sophisticated investors, may not require banks to carry out the same amount of suitability and due diligence on the customers when executing transactions as they would for retail customers. Markets such as Singapore and Hong Kong also have their own definitions for sophisticated investors which are accredited investors (AI) and professional investors respectively. Banks in Singapore, for instance, will need to determine whether their AI customers qualify as market professionals under the MiFID II framework. If the AI customers in Singapore choose to opt up under the MiFID II framework, they will be accorded lighter-touch protection, Pogson said. Likewise banks in Hong Kong will also need to determine whether their customers with professional investor status qualify as market professionals under MiFID II. "Banks in Asia would need to carry out a gap analysis to determine the work they have to do, the differences in the type of customers and what the gain is," he said. How MiFID II affect asset managers Asset managers, fund managers and hedge funds will also be affected by MiFID II, but to a lesser extent than banks. Asset managers will need to work out what is required of them under MiFID II, but are likely to rely on prime brokers and custodians to help them comply with, for example, carrying out trade execution and fulfilling reporting requirements, Pogson said. "The added burden
January 10, 2017

Head of Regulatory Practice Nizam Ismail quoted in a Thomson Reuters article on the showcase of technology at a FinTech festival

RHTLaw Taylor Wessing’s Head of Regulatory Practice Nizam Ismail was featured in an article published in Thomson Reuters titled “Regtech in Singapore set to Shape Risk and Compliance Functions”. The article was first published on Thomson Reuters Accelus Regulatory Intelligence and Compliance Complete. Source: Copyright © Thomson Reuters 2017 Date: 9 January 2017 Author: Patricia Lee Regtech in Singapore set to Shape Risk and Compliance Functions The pace of regulatory change and the burden it places on financial institutions which are still dealing with large-scale remedial programmes is driving the use of regulatory technology to make compliance processes more efficient. Regtech took centre stage at the recent FinTech festival held in Singapore two months ago, and the one-day conference dedicated to this topic underscored the importance the industry accords to this new phenomenon which is set to shape risk and compliance functions. Nizam Ismail, head of Regulatory Practice at RHTLaw Taylor Wessing in Singapore, said the showcase of technology at the FinTech festival demonstrated that there were more creativity and product offerings now which could assist compliance functions. Compliance is complex and onerous Large scale remedial programmes now going on at large global financial institutions are typically being dealt with in a tactical fashion and this often means deploying an army of people to do the task, said Craig Davis, head of financial risk management for KPMG in Singapore. But such a way of undertaking the task was not sustainable, he said, and financial institutions are looking to adopt regtech to make the processes more efficient. The increasingly complex and onerous nature of compliance work has also made it impossible to carry out tasks manually, Ismail said. The case surrounding scandal-hit Malaysian state fund 1MDB, which involved large volumes of transactions carried out at a number of banks, is a good example where technology is essential for tracking transactions and flagging out those that are unusual, suspicious or high risk. "Technology works hand in glove with compliance but most of the time you still need a compliance officer to make a judgment call," he said. Renewed Focus The renewed focus on regtech is largely a result of a proliferation of technology and enablers that has made adoption more viable, such as by allowing processes to be automated. Such technology includes robotic process automation (RPA), artificial intelligence, cloud computing, the blockchain technology, anti-money laundering utility models and robo-advisers. Robotic process automation, for instance, allows much of the manual processes in risk and compliance functions to be automated, Davis said. He cited RPA as an example which can help financial institutions automate processes when they undertake large-scale remediation progammes to deal with regulatory changes. It also adds value to the business while ensuring they remain compliant. Natural language processing is a type of artificial intelligence which reads words and then plugs in to the regulatory requirements. Transaction Monitoring, Trade Surveillance and KYC Transaction monitoring and trade surveillance are two main areas in which financial institutions are seeking to make their systems and processes more efficient through the use of technology while remaining compliant. In his annual report speech last year, Ravi Menon, managing director of the Monetary Authority of Singapore, said the regulator would use trade surveillance tools to track market manipulation. Client onboarding, which can involve considerable amount of manual work, is a key issue for many financial institutions, said Davis. The KYC process, for instance, can involve a number of people, is time consuming and can pose a number of regulatory challenges. That process, Davis said, can now be largely automated using digitization and natural language processing which learns over time and can quickly identify whether financial institutions have the right information about their customers. It then provides an exception report as opposed to a manual process, providing efficiencies and allowing staff to focus on value-adding activities. "If you can automate 80 percent of that [KYC] process, you can onboard clients quicker, which leads to cost savings for financial institutions. At the moment, manual processes take a long time and will always have human errors. To the extent that you can digitise the process, you can get people to focus on the exceptions and provide value as opposed to a manual factory environment where discrepancies can be missed. Organisations should get greater client satisfaction, compliance should be more robust and there will be cost benefits," he said. AML Utility Model MAS announced last year that it is looking to set up an anti-money laundering utility model which will allow financial institutions to share KYC resources on both individuals and companies. The utility model will have a common platform that allows information to be leveraged. According to Davis, the biggest financial institutions typically run the utility with the data shared across participating banks. "It makes a very good case for regulators to have a utility model for the banks to come together. In addition to the systemic benefits, they will have access to a wider range of data. For this utility to work, there should be no competitive advantage to the data to ensure full participation," he said. A utility model provides further benefits from customers' perspective, Davis said. The process of onboarding a new client can be a laborious one and if centralised, banks will not have to continually request customers for the same information, thus increasing the customer experience. A utility model will also make carrying out transactions easier for customers. Cloud Computing Cloud computing, along with artificial intelligence, is expected to bring about some major changes to risk and compliance functions. Cloud computing, which the MAS has acknowledged its use as long as financial institutions follow its guidelines, could potentially help banks avert system legacy issues as a result of having to build bespoke systems which require costly maintenance and upgrading, Davis said. Increasingly, banks are outsourcing the hosting of technology and the running of data on a centralised platform to third parties. "Being able to host on cloud computing, being able to access a larger data set and along with cognitive approaches such as machine learning and artificial intelligence, you really start to build something powerful. By having it centralised on a platform which a number of organisations use, everybody is sharing the costs and receiving the benefits," Davis said. Distinct Change in Business model; Revolutionary While the industry has yet to see massive investments put into the adoption of new regulatory technology, there is growing interest as financial institutions try to figure out how technology can help their risk and compliance functions achieve efficiency and cost savings. Davis said the emergence of new regtech would lead to a distinct change in business models as financial institutions increasingly automate the risk and compliance functions using advanced analytics. There will also be a move to industry-wide utilities, outsourcing some of the systems to third-party providers or entire processes in a managed services approach. "I see it [use of regtech] as an evolution rather than disruptive. The process is still largely the same; you are just making it more efficient, automated and using advanced analytics to take away the manual process. It is not just about reducing headcount, it is using the current headcount to focus on value-added activity," he said. Regulators the Ultimate Beneficiary While the impetus to adopt new regtech approaches is coming from the industry, regulators will be the ultimate beneficiary as they tap into the data and analytics to help them understand the regulatory and systemic impacts, Davis said. "Regulators want to know how to regulate it
December 30, 2016

RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar interviewed by Channel NewsAsia

RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar was interviewed by Channel NewsAsia and featured in an article titled "Slow start, but future remains bright for ASEAN Economic Community: Analysts". The article makes reference to an interview with Channel NewsAsia on Singapore Tonight segment, where Azman shared his views on the impact of ASEAN Economic Community on local SMEs in Singapore. The article was first published in Channel NewsAsia on 29th December 2016.  Slow start, but future remains bright for ASEAN Economic Community: Analysts Source: Channel NewsAsia Date: 29 December 2016 Author: Calvin Hui SINGAPORE: Saturday (Dec 31) will mark the first year anniversary of the ASEAN Economic Community (AEC). Conceived as a single market and production base, the AEC is part of broader efforts to integrate ASEAN economies. But one year on from its inception, about 74 per cent of Singapore companies polled in a recent Singapore Business Federation (SBF) survey said they do not think the AEC has benefited them. Associate Professor Simon Tay, chairman of the Singapore Institute of International Affairs (SIIA), said bigger companies have the capabilities to take advantage of opportunities from the AEC, but smaller business may not be so well equipped to do so. “So the big test in the longer term will be whether the SMEs (small- and medium-sized enterprises) will be able to also play across the region,” he said. “And not just Singapore SMEs, (but also) Filipino SMEs, Indonesian SMEs. “It will take some time because the integration is not just as deep. (There's) still too much bureaucracy and rules standing in the way. The tariffs, I think are gone, but these non-tariff measures are almost like barriers to deeper integration.” RHTLaw Taylor Wessing’s deputy managing partner Azman Jaafar agreed that the lack of resources is a stumbling block for smaller companies. However, he added that it “just means that you have to be a little more ingenious”. IMPORTANT TO CHANGE MINDSET                              ASEAN’s market of more than 600 million people, and almost US$3 trillion in combined GDP, represents vast opportunities for companies from the city-state of Singapore. But Mr Azman, who is also chairman of the law firm’s ASEAN Plus Group, said local companies could have traditional business models that limits the extent of their expansion outside of Singapore.  “Local SMEs who want to benefit from the AEC must rethink how they are doing their business, and how they should change their mind set, and apply quite different rules of engagement,” he said. Governments can also help to change these attitudes. Said Assoc Prof Tay: “Sometimes, SMEs, not just in Singapore but other countries - they are really on the defensive. Say (they) don't let people in, because I can't compete in my own home market. “I think increasingly, governments have got to reassure SMEs that as the AEC opens up, they will be given assistance by ASEAN, by governments on the whole, to also go out and become more competitive, become more efficient on the whole about boundaries." There is also the cultural diversity of the 10 member countries in ASEAN to consider, said Mr Azman. “When our local businesses are able to appreciate these differences, they are probably better placed to get into these markets,” he said. LONG TERM OUTLOOK BRIGHT Observers agree that it is premature to write off the AEC despite its slow start. "There's a right to get a bit disappointed with the AEC in the first year,” said Assoc Prof Tay. “But what makes me slightly optimistic is that, at the national level, different key economies have already started to see the need for reform." Mr Azman emphasised that the push for the AEC to succeed must not come from just the governments, but other key stakeholders too. “It’s easy to say that the government has got to push this. But at the end of the day, a lot of things happens without government assistance. “Within industries and within countries, if we keep discussing this, we open up the discussion across borders. This creates a level of awareness that’s very different from the level of awareness in a local forum.”  Azman's full feature can be found in the news report: Singapore Tonight - Channel NewsAsia, 29 December 2016