Description
This paper examines how Hong Kong, Singapore, and South Korea have strategically navigated European Union regulatory pressures in the 2010s, specifically in financial benchmarks and derivatives transparency under the EU’s Benchmark Regulations (BMR) and the Markets in Financial Instruments Directive II (MiFID II). Though primarily aimed at EU entities, these regulations placed significant compliance burdens on Asian markets closely integrated with Europe. Applying the “Market Power Europe” (MPE) framework, underpinned by comparative analysis with extensive process tracing, we analyze how these Asian economies exercise “regulatory statecraft” to respond to EU’s extraterritorial reach in two “paired cases”: (1) South Korea’s proactive equivalence process under BMR, leveraging its role as an Asian benchmark hub, compared to Singapore’s pursuit of EU recognition; and (2) Hong Kong’s early partial recognition under MiFID II, contrasted with Singapore’s slower progress, despite the substantial presence of EU firms. These divergent responses reflect how Asian regulators balance external regulatory pressures, mobilizing domestic structures and geopolitical influences to protect policy autonomy while retaining EU market ties. The complexity of transnational regulatory politics offers nuanced insights into the coping mechanisms of the Asia’s regulatory authorities toward the EU as a regulatory great power, and suggests the imperatives of refining the MPE framework to better conceive regulatory power and its practice in global finance. In relations with asymmetrical interdependence, the hardball politics from the core states often meets skillful catchers in the periphery.
