Of course, whether further consolidation actually takes place, and if so when, is for the players and the market to decide. But further opening up of the banking sector is inevitable. We have been negotiating FTAs with Australia and the US, and are very close to reaching agreement with both. Our FTA partners expect to be given greater access to our financial sector. The local banks must brace themselves for further liberalisation, by upgrading themselves and keeping pace with international best practices. Capital markets In the capital markets, the Stock Exchange of Singapore and SIMEX have demutualised and merged to form the Singapore Exchange (SGX). SGX is now listed and has expanded its product offerings to include single stock and bond futures, and exchange-traded funds. In the stockbroking industry, with the liberalisation of fees and opening up of access, commissions have shrunk. The brokerages have been consolidating, upgrading their capabilities and widening their service and product offerings. Now, your broker will not only buy and sell shares for you, but may also help you to invest in unit trusts or cash management accounts, or give you financial advice. But the restructuring is taking place in a very difficult bear market, and the process is not yet complete. From the point of view of growing the industry, the results of the liberalisation have been disappointing. There has been no post-liberalisation “Big Bang” in the local capital markets. This is partly the result of poor market conditions globally, and partly the way equities markets have developed.

This is important as the Islamic banking institution has, to a large extent of its portfolio, long-term assets that include long-term Islamic housing mortgages and long-term Islamic financial instruments. These two asset classes constitute approximately 80% of their portfolio. This over-concentration warrants the need to have effective risk mitigating techniques and instruments as to avoid any potential adverse consequences that could occur in volatile market conditions. On major importance is the elimination of uncertainties from a particular transaction. The need for Islamic hedging instruments in the Islamic financial services industry has therefore become increasingly important. Thus far, significant progress in this area has yet to be made. It is hoped that this seminar will be able to generate new ideas that can be implemented to support the requirements of the Islamic financial services industry players. Ladies and Gentlemen, As the Islamic finance is undergoing transformation, the financial infrastructure and product development must be complemented by the ability to manage risks by market participants. This becomes particularly important as the growing and changing needs and expectations of consumers occurs as a result of increased education levels and growing wealth. Corporate customers have become more performance-oriented and are demanding both competitively financial products and world-class financial advisory services. Consumers too are becoming increasingly discerning and have become more involved in their financial decisions, demanding a broader range of products and services at more competitive prices through more efficient and convenient channels.