We caught up with HPS Investment Partners’ Thomas Ochensberger to find out more about how the changes in investment regulations and compliance have been affecting day-to-day business. Ahead of next month’s TSAM Hong Kong event, the Asia Compliance Officer reveals more about the impact of GDPR and MiFID II on the Asian markets, plus the pressure of ESG investments.
Firstly, we wanted to know more about the priorities of a CO at HPS Investment Partners: “It is my role is to cover the regional public and private credit operations in Hong Kong and Australia. My focus is on the administration of our internal compliance program and regional regulatory developments, including interactions with relevant regulators and external stakeholders,” Ochensberger explains. “I am also working on ESG matters and I’m a member of a networking group, which is organized by the UNPRI in Hong Kong. Prior to my current role, I was with CVC Capital Partners Asia and Morgan Stanley, both in Hong Kong and London where I started my career at Lehman Brothers.”
What’s happening with GDPR and MiFID II?
Following its implementation earlier this year, the investment regulations associated with GDPR appears to have made little impact on firms in the Asia-Pacific region. “Multinational organizations in Asia are establishing whether or not GDPR applies to the way they operate. This is not something I have seen being replicated by smaller, regional players,” Ochensberger confesses. “As such, the impact so far has been somewhat limited, but this might be the calm before the storm. When we start seeing GDPR-related actions being enforced, I believe this will result in subsequent process enhancements.” In addition to GDPR, the new requirements outlined in the MiFID II appear to have been easily assimilated into the best practices of APAC firms. “Like GDPR, there is a real difference in approach between the multinational organizations and smaller, regional players,” Ochensberger indicates. “I don’t think the smaller players have given it too much thought, whereas the multinational organizations have established policies and procedures to comply.”
Making ESG and Sustainability a Priority
Another key area is ESG investments, which are fast becoming a priority for investors and investment managers alike. But what are the influential factors pushing the ESG agenda on both a regional and global scale? “One key global factor is clearly investor demand, especially with millennials. They not only want to achieve worthwhile investment returns, but they wish to do so in a sustainable fashion,” Ochensberger surmises. “This means that big asset owners, like university endowments and pension funds, are paying more attention and increasing pressure on asset managers to include ESG in the investment process. One strong regional trend is more of a top-down approach, whereby governments, regulators, and self-regulating bodies (such as stock exchanges), mandate enhanced ESG disclosures.”
As well as the positive nature of sustainability, businesses are likely to encounter more pressure to comply with the rigid ESG investment regulations. “The regulatory pressure is a given and will only grow in strength,” Ochensberger expresses. “One just has to look at the rising volume of green bonds in China, the spread of mandatory ESG disclosure requirements at stock exchanges in the region, and the recent EU initiatives to create a clear, detailed EU classification system – or taxonomy for sustainable activities.”
TSAM Hong Kong 2018
Thomas Ochensberger is set to join the opening Regulations & Compliance panel at TSAM Hong Kong 2018, where he will examine the regional compliance complexities and requirements for different jurisdictions. Here’s a taster of what you can expect from the discussion: “We’ll be talking about the complexities of running a regional compliance program, which, for many of us, is often complicated further by working for an organization headquartered overseas, with its own regulatory focus areas,” Ochensberger reveals. “We’ll also talk a little bit about current themes in investment regulations. I would love to get the crystal ball out and see whether we can identify some upcoming regulatory changes, or at least focus areas too!”