Speeches

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DEEPENING DEBT MARKET ACTIVITIES

30. Besides the above initiatives, MAS will continue to look at other areas to broaden and deepen debt market activities in Singapore. One possibility is the development of asset-backed securitisation in Singapore, in particular the promotion of mortgage-backed securities and the feasibility of establishing a mortgage corporation. We will continue to work closely with the industry to develop these ideas further.

31. What about Singapore's own electronic bond strategy? I alluded earlier that rapid advances in electronic-bond technologies have led to a proliferation of e-bond trading systems in US and Europe. The traditional dynamics of international bond markets are being re-shaped, and we may yet see the concentration of bond trading in a few centres around the world. Bond markets, which have traditionally been based on dealers acting as intermediaries, may eventually see greater market segmentation down the road, with commoditised plain vanilla instruments traded electronically, whilst complex fixed income instruments continue to be transacted through intermediaries. E-bond technologies will also lead to greater price transparencies, and the possibility of lower trading costs and increased trading activities. Asian bond markets, whilst still in relatively nascent stages of development, would not be immune to the electronic revolution. Singapore is well-placed to capitalise on this e-revolution to deepen and strengthen the debt trading and origination business here.

32. MAS is studying how we can facilitate the introduction of e-bond trading in Singapore. We will encourage financial institutions in Singapore and other .com entities to use e-bond technology and set up cyber bond trading systems to improve the efficiency of the bond market. To facilitate the development of a sound market infrastructure for e-bond activities, MAS will also look into establishing an appropriate regulatory regime for the setting up of cyber bond exchanges in Singapore.

33. Various major debt intermediaries and bond portals have started to devote their resources to boosting their e-commerce strategies. We are confident that the proprietary bond distribution and trading systems available in US and Europe will soon find their way to Asia.

CONCLUSION

34. In conclusion, the success of any capital market depends on many factors. Key among these, the need to draw a critical mass of issuers and investors; a conducive market structure and regulatory environment; and the presence of sophisticated market intermediaries to facilitate the issuance, distribution and trading of bonds.

35. Singapore's debt market initiatives have concentrated on these fronts. The new initiatives I have shared with you today reflect our efforts to constantly look at ways to boost the growth of Asian financial markets and the Singapore financial sector. We will continue to engage the industry and look at ways to further enhance our capital markets against the backdrop of the improving economic prospects in Asia. Over the course of the next two days, you will be hearing from a host of keynote speakers and industry experts on their outlook for Asia and the development of financial markets here. We hope that you will leave from this conference with a clearer idea of the many opportunities available in Asia.