Partners at Clifford Chance are concerned that their clients in Asia may not fully appreciate the extent to which European moves to tighten regulation of fund managers could affect their business.

A recent survey of buy-side participants conducted by AsianInvestor and Clifford Chance quizzed respondents on several regulatory issues.

We asked what the impact on business would be if the European Commission were to adopt the alternative investment fund managers (AIFM) directive in its current proposed form, and whether funds will register with the US Securities & Exchange Commission if the US were to remove the 15-person exemption for fund advisors.

Clifford Chance noticed a strange reversal in the expected results, with 64% of respondents saying AIFM won't impact their business, while 75% say they will register with the SEC if required.

Mark Shipman, a partner in the law firm's funds division, believes this shows that market participants in Asia still don't appreciate the influence of European regulation, and remain focused on the US. AIFM is going to require registration and licensing for all hedge funds, private-equity firms and funds of funds seeking to manage European money.

Matthias Feldmann, another partner, suggests people in Asia only see this as a far-away bureaucracy looking to implement reforms in 2012, in a move that the US Treasury is trying to blunt. And too few people in Asia have a handle on what is actually going on.

"Foreign participants will be able to market to Europe if there's regulatory reciprocity and tax and information exchanges between stock markets and governments," Feldmann says. "But what does 'reciprocity' mean and how will it work? How hard is it going to be to actually comply?"

In contrast, the market here seems ready -- perhaps, resigned -- to do the SEC's bidding. The last time the regulator tried to get funds to register, hardly any bothered, and the attempt created a major stir.

Feldmann says, "It seems as though participants in Asia are focused on what changes are coming up in the US, but not in Europe. They may need to reconsider their priorities."

The full survey results appear in the May edition of AsianInvestor magazine.