Asia must join the EU and US in their post-crunch regulatory efforts if the region is to avert its own financial crisis, according to the head of Hong Kong's top market watchdog.

Speaking at the third Pan-Asian Regulatory Summit in Hong Kong last week, Ashley Alder, the chief executive of the Securities and Futures Commission (SFC) and former Herbert Smith Asia head, said regional institutions would be "unbelievably stupid" to ignore the lessons learned by Western economies, and had a "golden opportunity" to ensure Asia did not experience its own financial collapse.

Alder (pictured) said it was inevitable that Asia's financial sectors would eventually rival those in the US and EU in terms of size and sophistication, and it was critical that the region played its part in the global regulatory agenda.

"We have a golden opportunity to ensure that we don't turn the Asian dream into a nightmare," he told delegates at the summit.

"It is easy to blame the financial crisis on Western excess and to claim that Asia is different… but in my view it would be unbelievably stupid to attempt to grow the Asian financial sector whilst ignoring some of the deep problems revealed by the crisis of the west.

"If we can learn from the mistakes made elsewhere and ensure that they don't not occur [in Asia], we will lay the foundations of a safe and socially useful financial system. If we don't, we risk a repeat of the crisis here."

The Asian markets have historically been seen as distinct from Western economies due to their smaller scale and cultural differences, with many local business leaders opposed to tighter regulations amid fears such moves could hinder further growth.

However, given the its fast-rising status on the global financial stage, Alder argued that Asia should implement its own reforms to avoid US and European rules being extended to the East in a 'one size fits all' approach.

Such an outcome could ignore the huge diversity and varying stages of development of the economies in this part of the world, he said.

"If Asia does not get properly involved in the evolving global agenda, we will find that the US and European rules will be extended to us whether we like it or not. The result could be isolation of Asian markets for international finance."

Alder added that the SFC plans to do everything in its power to boost the quality of the region's markets, including a push to raise the standards of IPOs in Hong Kong, with initiatives including encouraging banks to do their own due diligence.

"It's something we made plain in the consultation paper we put out in May," Alder told Legal Week.

"There was a move to effectively farm out much of the work that banks were doing in IPOs to law firms.

"But bank sponsors perform a central role, and you simply can't delegate that. It doesn't mean that law firms can't contribute very meaningfully to the process, because they do, but you can't simply transfer your obligations."

Alder took up the chief exec role at the SFC in October last year after leading the firm's Asia practice since 2005. He first joined the firm in 1984, before making partner in 1994 and later spending three years as executive director of the SFC's corporate finance division from 2001 to 2004.

Alder was succeeded as Herbert Smith Asia head by regional dispute resolution chief Mark Johnson.

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