These concepts are echoed in the various principles that follow, which highlight more specific recommendations based upon the roles market participants take on and the types of transactions in which they engage. Labels aside, the fundamental recommendations regarding roles recognize the importance of clear communication of roles, the importance of fairness and the strong expectation that discretion not be used in a manner designed to disadvantage a client. Clarity of terminology was again important during the development of Principle 11 on prehedging. The Code is very specific in how it describes pre-hedging. It is defined as “the management of the risk associated with one or more anticipated client orders, designed to benefit the client in connection with such orders and any resulting transactions.” The principle then lays out circumstances in which such pre-hedging may or may not be appropriate. 2/6  BIS central bankers' speeches  The principles on information sharing cover topics where there had seemed to be a lack of clarity within the market. The principles emphasize the importance of appropriately identifying and managing confidential information. They describe what may constitute confidential information and when such information should or should not be shared and with whom. They also provide guidance as to how market participants might communicate market color appropriately and, critically, without compromising confidential information. It is important to recognize that the FX market is not entirely about trading and execution—risk management, compliance, and confirmation and settlement are central to FX transactions, and they comprise the final two sections of the Code.

Another example of product innovation is in the growth of investment products such as property securities unit trusts and listed property securities funds. A potentially exciting area for innovation is in the property derivatives market. Property derivatives offer the potential for property companies, asset managers, banks and investors to hedge or rebalance their property exposure according to their views on the market. A key criterion to develop the property derivative market in Singapore would be the existence of transparent, reliable and wellfollowed direct property indices, which serve as reference points or benchmarks for structuring of property derivative products. Given the prospects of the Singapore property market, industry players are currently studying the construction of property indices based on the Singapore property market. We are excited to see the introduction of these property indices which would enhance information on Singapore’s property market and provide benchmarks for structuring property derivatives and other innovative investment products. These developments will add to the breadth and depth of Singapore’s markets by providing investing and hedging tools for market participants in a cost-effective and flexible manner. Moreover, they would lead to development of expertise in product structuring as well as real estate portfolio analysis and performance measurement. 2  BIS Review 38/2007  Conclusion So ladies and gentlemen, general positive sentiments suggest that 2007 and the years ahead will be exciting for Asia and its property sector. I am certain that with judicious planning and sound execution, the sector will see strong growth, sustained by liquidity from the capital markets.