There has been a worldwide wave of consolidation among financial institutions, stock and derivative exchanges, and even regulatory bodies. In 1999, there were 900 merger-and-acquisition (M&A) transactions among banks, worth $ 300 billion worldwide.2 The securities industry has been no less active, with exchanges and clearinghouses in a flurry of mergers and alliances. While globalisation and integration are established features of capital markets, two more recent trends are noteworthy: firstly, stronger linkages between capital market and treasury activities, and secondly, the impact of technology and the internet on capital markets, particularly in the securities industry. MAS’ guidelines on treatment of credit derivatives and securitisation The links between capital market and treasury activities reflect an increase in cross-border transactions. In the US and Europe, the spate of mergers and acquisitions has boosted the volume of foreign exchange flows. The mergers have also led to greater use of securitisation and credit derivatives, and caused European credit derivative markets to expand significantly.3 1 2 3  1999 Survey of the Singapore corporate debt market. “European banking turns decisive corner on road to consolidation”, International Wealth Management, July 2000. “Use of credit derivatives in bank mergers soars”, International Financing Review, March 2000. 1  BIS Review 69/2000  In Singapore, the burgeoning capital market has similarly benefited our treasury industry. Increased debt issuance has led to more swaps and other money market activities. Participants are using more sophisticated treasury and capital market products. We must keep our regulatory framework up-to-date, so that it provides clarity, and allows growth and innovation.

A broad spectrum of activities could possibly constitute “dealing in securities”: broking in securities, referring customers to open accounts with licensed dealers for the purpose of trading in securities, or providing prospectuses and application forms to prospective customers. As for “investment advice”, our current interpretation accepts that the provision of factual information does not constitute investment advice. What constituted dealing or investment advice used to be fairly clear-cut and well-established. But the breakdown of the securities value chain has blurred the distinctions between fact and investment advice, and between dealing in securities and merely providing information. We therefore need to refine our interpretation of these terms, institute basic safeguards and spell out how to treat new entities. Licensing approach In licensing investment advisers and dealers, our approach is to require persons conducting securities activities in Singapore to possess suitable qualifications, relevant professional experience and good character. This would give comfort to investors that they can expect competent advice and reliable execution from investment advisers and dealers. Our licensing requirements for the new electronic market intermediaries should not be unduly onerous. They will not impose heavy prudential capital requirements. The main focus will be on website disclosure of credentials, physical addresses and other relevant information. In lieu of a corporate track record, licensees need only demonstrate individual qualifications and experience. Bona fide intermediaries who subscribe to the objective of providing financial services of high standard should be pleased to come under our licensing ambit.