Industry figures in Hong Kong united in praise of Martin Wheatley’s two terms as the city’s first Securities and Futures Commission CEO after it was revealed he would step down next summer.
By the time he leaves next June, Wheatley will have worked at the commission for six years, having joined in June 2005 and been appointed CEO the following year. His second term is set to expire in 2011.
A spokesman for the SFC confirmed only that Wheatley planned to return to the UK. It was unclear if an extension to his contract was offered or if he chose to return of his own accord.
Sources suggest he would walk into a top job at the Financial Services Authority (FSA) in London, with the UK regulator under severe pressure and undergoing change in the wake of the global financial crisis.
They also note that Alexa Lam, the SFC’s executive director and deputy CEO of policy, China and investment products, would be eager to follow in his footsteps.
The question of succession will be a taxing one for the SFC. Certainly the consensus among sources that AsianInvestor spoke to was that the commission will need to seek someone with international experience who either has or can develop good relations with Chinese authorities.
“The importance of China in the context of the way the whole regime is moving in Hong Kong and the promotion of Hong Kong as an renminbi trade financial centre means [the SFC] may be thinking much more closely about someone with China connections,” one source says.
Alan Ewins, a partner and head of Allen & Overy’s Asia-Pacific regulatory group, suggests that Hong Kong is now at a crossroads in terms of regulatory reform. “The Hong Kong regime has started along the process of significant regulatory change under [Wheatley’s] stewardship. The changes are designed to be in step with international drivers and developments, while catering for major domestic issues such as mini-bonds mis-selling.
“This has been a delicate balancing act he has performed in tandem with [SFC head of enforcement] Mark Steward to arrive at a reasonable degree of equilibrium in the market.
“That equilibrium will be tested in the wake of his departure, and it is to be hoped that his successor will ensure the stability that will be essential to the Hong Kong market in light of the challenges ahead posed by the coalescing global regulatory requirements, regional market competition and local issues.”
Wheatley’s tenure has been challenging to say the least, spanning the outbreak of the global financial crisis and the Lehman Brothers mini-bond scandal that rocked the city with widespread allegations of mis-selling.
But Wheatley received universal praise for a pragmatic approach that saw him refuse to introduce a ban on short-selling when other regulators around the world fell into line, and for leading the post-crisis debate in his role with the International Organisation of Securities Commissions.
“One of the great things about Martin, he has brought a sense of transparency and openness and good communication with the industry,” says James Walker, head of the Asia asset management practice at Clifford Chance.
“He has had to fight fires while at the same time make sure that regulations are reformed in such a way as to make sure Hong Kong can continue to have good product development.”
Walker says Wheatley will be remembered for steering Hong Kong successfully through the mini-bond crisis and dealing with all the investor issues, “but most importantly making sure we now have a product approval and disclosure regime which is more focused on the types of products that were being manufactured and sold in Hong Kong. Reforming the regime in relation to structured products and mutual funds, this has been a very worthwhile achievement.”
Philippa Allen, CEO of Compliance Asia, suggests Wheatley raised the profile of the SFC along with Steward by increasing enforcement actions, penalties and criminal prosecutions. “That has been very much part of Martin’s vision to raise the profile of the SFC as a proper regulator,” she says.
“He has brought professionalism to the role and he has not alienated any particular group. Because he came from outside Hong Kong, he was relatively impartial to all the conflicting demands that are placed on the regulator. There has been no preferential treatment or cosying up to certain industry groups.”
She also praised Wheatley for overseeing huge growth in the number of financial firms setting up in Hong Kong. “He has been instrumental in really smoothing the licensing process, making it easier for firms to get into Hong Kong and get up and running.”
Wheatley has also been a prominent critic of the rise in high-frequency trading.
Meanwhile Rory Gallaher, partner and head of the financial services practice group at Deacons, adds: “I think his steadiness after the financial crisis is the feature that really stands out. He has proved himself very level headed in a crisis and it's a great shame that he's moving on.”
For his part, Wheatley describes his six years at the SFC as “hectic, demanding at times and very fruitful”.
“The commission has taken in its stride the many challenges that confronted the financial markets and regulators and we have been able to adopt a pragmatic and sensible approach in our regulation,” he adds. “I am also encouraged to see the work we have done in tackling market misconduct.”
Prior to joining the SFC, Wheatley was deputy chief executive of the London Stock Exchange. He was also chairman of FTSE International and sat on the Listing Authority Advisory Committee of the FSA in England.