A Fool’s Errand

I’ve always been excited about the commodities market because it is truly international. As a child, I wanted to travel. As founder and managing director of the Singapore-based manager of a Cayman Islands commodity fund, though, I have to admit travel also has a downside.

Read Global Regulatory Outlook 2018 

In total, our business deals with five regulators across three jurisdictions: the Monetary Authority of Singapore (MAS), since that’s where we’re based; the Financial Conduct Authority (FCA) in the United Kingdom, which oversees our London subsidiary; the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the United States, because of the trading we do there, principally in commodity futures; and the Cayman Islands Monetary Authority (CIMA), because that’s where the fund is domiciled.

If nothing else, this has given us a good perspective on the rapid evolution of global financial regulation in the last decade or more. In summary: It’s getting more difficult.

When our business was founded, the CIMA had no reporting requirements, the MAS allowed hedge funds exempt status and there was no requirement to register with the SEC or CFTC. (We didn’t have a London subsidiary at the start, so the FCA was no problem.) Since then, and particularly since the financial crisis, the increase in regulatory demands has been relentless, culminating perhaps in the Alternative Investment Fund Managers Directive (AIFMD) and now the Markets in Financial Instruments Directive II (HiFlD ll). 

A Fool's Errand - Global Regulatory Outlook 2018

The tail is not yet wagging the dog; our business is currently upgrading its London office, opened in 2011 as a sub-adviser, to a full alternative investment fund manager, bringing it under the AIFMD regime. Despite the extra work, it still makes sense to do so from a business perspective, though the additional regulatory burden was something the board carefully considered.

Two things are worth noting, however. First, despite talk about it, efforts to promote regulatory alignment between jurisdictions have achieved little. As a result, requirements are duplicated and can even conflict—particularly as regulators increasingly assume extraterritorial power. We’ve had situations where, for example, the FCA required us to increase capital in our London subsidiary, but we’ve been prevented from doing so while awaiting permission from the MAS. 

The second point is more fundamental: It’s questionable whether this makes anything safer. While hedge fund managers were exempt, investors knew they had only their due diligence to protect them. Licensing, by contrast, provides a false sense of security, and it’s no coincidence that all the big scandals have occurred in licensed regimes. Ultimately, all such regimes will have loopholes and blind spots. Investors are never completely safe from the unscrupulous. With that in mind, it is hard to escape the feeling that regulators across the world are all pursuing a goal that is ultimately unattainable.

A Fool’s Errand 2018-04-19T00:00:00.0000000 /insights/publications/compliance-and-regulatory-consulting/global-regulatory-outlook-2018/a-fools-errand /-/media/assets/images/publications/thumbnails/global-regulatory-outlook/gro-a-fools-errand.ashx publication {DA6CC51B-740E-439A-B283-2BBFB5326BAA} {DE05ECA4-1852-4BEF-A4E1-491CB497F9CB} {EBC1AB28-1393-493C-AF32-19B3B0B6E171} {1C3CB363-1B9A-40E2-AF19-5C433260F861} {E1E71CC6-CE33-46BD-A6CF-B547EF2D052C} {4FD55120-2DD8-4DB5-8DAA-3D9212C2436D} {4984481D-079C-4B42-B985-EA34752D3CD5} {E8669D15-7AE5-41D4-BE77-6C5E07C03F38} {36EE33A2-B269-45FC-8D7C-A5B66255C61E} {19B96101-31A4-4C6D-9597-A39E0C9E24C8} {910B8B61-AD72-44CF-87C2-BFA5FE119417} {742DB722-E4B5-4E18-A540-4BFA6F8D6843} {AB22E3A7-0FD2-43A7-91E0-C3590E9141B9} {5AA4BE28-97DD-427B-A8CA-7B3BF3B5E4BF} {C9A6FAA4-0FA0-40A8-B4D2-2A0DDD29F14D} {F9A927B5-B65A-4F14-B590-DD46B5DC907A} {063D2ACD-1006-4DAD-8E9F-A8084C7358F8} {2361D727-0847-4B20-B8E9-68E7DBA5C7DC} {B062D54C-1425-4A04-8F9F-95EA14068E6D} {5BF06FE7-E88C-4627-A701-3E042F076F1F} {65648E61-ED08-40DF-AEE6-DB90ABD49289} {C8894F56-FF6C-4DEA-AB91-58D66A7F0624} {B7CF2537-1DBA-485F-A14F-8BD1524F1A8B} {95D7F66C-11BB-4E7D-B07C-48874A321F98}

Related Services

Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

By Jurisdiction

Regionally targeted assistance for asset managers in compliance program development, implementation and maintenance

By Jurisdiction
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

U.S. Regulation

Comprehensive support for asset managers registering in the U.S.

U.S. Regulation
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

EU Regulation

Comprehensive compliance and regulatory support for EU firms.

EU Regulation
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

UK Regulation

Comprehensive compliance and regulatory support for FCA authorized firms.

UK Regulation
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Irish Regulation

Comprehensive support for asset managers registering in Ireland.

Irish Regulation
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Hong Kong Regulation

Comprehensive SFC licensing support.

Hong Kong Regulation
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Singapore Regulation

Comprehensive MAS licensing support.

Singapore Regulation
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Channel Islands Services

Range of regulatory and compliance consulting services for firms registered in the Channel Islands.

Channel Islands Services
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Global Advice and Consulting

Assistance to develop, implement, and manage global compliance and regulatory consulting programs.

Global Advice and Consulting
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Compliance Due Diligence

Regulatory operational due diligence for asset managers.

Compliance Due Diligence
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Cybersecurity Services

Cybersecurity support for asset managers.

Cybersecurity Services
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Financial Crime Prevention

Guidance on preventing financial crime.

Financial Crime Prevention
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Hosted Regulatory Solution

FCA hosted regulatory solution for UK and EU asset managers.

Hosted Regulatory Solution
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Market Services

Assistance with markets, transaction reporting and surveillance.

Market Services
Duff & Phelps Compliance and Regulatory Consulting

Compliance and Regulatory Consulting

Regulatory Enforcement

Compliance support during an enforcement investigation.

Regulatory Enforcement
Duff & Phelps Valuation Advisory Services

Valuation Advisory

Valuation and consulting for financial reporting, federal, state and local tax, investment and risk management purposes.

Valuation Advisory
Duff & Phelps Valuation Advisory Services

Valuation Advisory

Alternative Asset Advisory

Transparent valuations of illiquid investments and complex securities and liquidity solutions through secondary market transactions.

Alternative Asset Advisory
Duff & Phelps Valuation Advisory Services

Valuation Advisory

Portfolio Valuation

Alternative investment valuation for private equity and hedge funds.

Portfolio Valuation
Duff & Phelps Disputes

Disputes and Investigations

Combined Duff & Phelps and Kroll disputes, investigations, cyber, business intelligence, cross-border restructuring and other advisory.

Disputes and Investigations
Duff & Phelps Disputes

Disputes and Investigations

Securities Litigation

Assistance with complex securities litigation.

Securities Litigation