Winds of change

Following the money

The global financial markets have seen some tectonic shifts lately, notably some changing power dynamics. The GameStop saga that unfolded earlier this year threatened to upend Wall Street. A motley army of part-time traders and members from social media site Reddit sent the struggling American videogame retailer’s stocks skyrocketing. These amateur traders almost foolishly bet against the house and, surprisingly, seem to have come out ahead.

The cryptocurrency rush that created instant millionaires isn’t that different. Investors with very little in common have come together to bet on fictional money, shunning the middlemen and conventional markets. The popularity of cryptocurrencies and the rally in their prices have put traditional financial institutions and governments in a fix; they are now playing catch up.

In this issue, we follow the money.

Our Cover Story, Fighting fund, discusses the trends in litigation financing in Asia. While most Asian jurisdictions do not allow third-party funding as yet, its growing popularity in more developed markets like the UK and Australia is making governments here do a rethink.

The two key financial hubs in the region are making moves to welcome the funding industry. Singapore has allowed third-party funding for international arbitration, including enforcement and mediation, since 2017, and Hong Kong allowed it in 2019. Singapore and Hong Kong provide a blueprint for reform and have demonstrated its benefits. Still, it may take time for third-party funding to shape the landscape of contentious matters in other jurisdictions due to differing and entrenched structures, cultures and norms.

Litigators and dispute resolution lawyers in the region expect more jurisdictions to introduce or relax their restrictions on litigation funding, possibly combined with collective redress reform.