Bénédicte Nolens, senior director and head of risk and strategy, at Hong Kong’s Securities and Futures Commission (SFC), talks to Karry Lai of Asialaw about her experience working in compliance, her recent focus on fintech, and her observations about career progression for women, including women as board directors.
Role of the compliance officer
Nolens discovered her calling for compliance in Hong Kong. Having earned her law degree from University of Chicago, she practised at White & Case for only a year between 1996 and 1997 in the US and Hong Kong, before she made her first jump into the sector at Goldman Sachs. She eventually became Asia regional deputy head of compliance during 10 years there.
The next step up in her career was at Credit Suisse, where she had 140 people under management when she joined as regional head of compliance in 2007.
Back in 1997, compliance wasn’t a clearly defined profession, but Nolens’ first hiring manager predicted, correctly that “it would grow fast and become very interesting”. “I took a risk early on, to come to Hong Kong and move from practicing law to compliance,” she recalls.
“Whereas in-house legal roles often focus on drafting legal agreements for specific business areas, compliance’s remit tends to be broader and more principle focused. For example, most countries have market misconduct rules. As a compliance head for the region overseeing 12 locations, the task is to find the similarities among those rules and create surveillance processes that are scalable across the region, rather than for example to advise on the legal definition of market misconduct in a specific market”. Compliance officers typically need to embrace technology and be willing to create and manage scalable processes.
As to her experience in compliance and risk Nolens notes: “You need a thick skin. My first boss eloquently yet to the point said that ‘If you are compliance officer and everybody loves you, you’re probably not doing your job.’ Compliance and risk officers put limits on conduct and capital, things the front office does not always like.” From the Foreign Corrupt Practices Act (FCPA) to meeting Basel capital requirements, compliance and risk is about managing conduct and prudential risk.
Nolens sees early indications of the global regulatory agenda slowing down in view of the very significant changes in governance already made by financial institutions after the global financial crisis, with the exception of new areas such as Fintech.
What’s ahead for Hong Kong?
Nolens’ role at the SFC, which she has been in since 2012, included deep dives into topical developments in securities markets. Nolens’ team published research on asset management and global systematically important financial institutions (G-SIFIs). Operating units of the SFC formulated certain observations contained in these research reports into policy changes.
Nolens’ recent focus has been on fintech. As fintech takes on an increasingly important role in the financial industry, organisations such as the International Organisation of Securities Commissions (IOSCO) are looking at their potential impact on regulation from a global perspective and SFC is doing the same from a domestic perspective. It has just completed a consultation on online distribution and advisory platforms, including robo-advice, as well as a consultation on cyber security.
“Financial technology intersects with securities regulation in multiple ways. How the regulations can best be complied with in the online context is not always clear. Consequently, many global regulators including the SFC have worked towards clarifying how their rules apply in the online context.”
Through the fintech contact point, a channel for businesses to engage with the SFC on fintech issues, the SFC hopes to provide as much guidance as possible for the nascent sector. To address the multiple disciplines involved in fintech, the SFC has a cross-divisional internal committee and an external advisory group. One of the topics that has been trending is initial coin offerings (ICOs). Nolens’ two-cents on ICOs is that it is important for ICO issuers to seek legal advice, including that the ICO does not constitute a security, collective investment scheme (CIS) or public offer in the countries in which offered. She notes it is important for outside counsel to provide clear advice that can be understood by technology professionals and fintech founders, who often don’t have a legal or regulatory background.
Helping to increase women on boards
As one of a small group of women working at her level of seniority in finance, Nolens observes that research has demonstrated that in case of lack of diversity of gender, race or religion, groupthink is more likely and performance suffers. In Hong Kong, notwithstanding many efforts to increase the number of women on boards, it is still low at around 11.1%.
Nevertheless, she also points at encouraging developments on global levels, such as BlackRock, Vanguard and State Street having made public their intention to stress the importance of female diversity on the boards of the companies they are invested in.
“Diversity is part of the Governance (G) and Social (S) factors of the concept of “Environmental, Social and Governance” (ESG) investing, which the leading global asset managers are increasingly focused on,” she says. The Hong Kong Stock Exchange has a “comply or explain” approach on ESG issues and the SFC has principles on responsible ownership to move these topics up on companies’ and investors agendas.
For women to grow in their careers, she encourages them to strengthen their network and entrepreneurial abilities, including at work, but also outside work through charity and not-for-profit activity. She encourages female professionals to maintain a close network of female and male mentors that they can rely on for advice. Through her role as the chairman of the education committee of Women in Finance, she has worked with women over the past six years to increase their networks, and hone their entrepreneurial skills, while living a more fulfilled life by helping others.