Recent and ongoing efforts have focused on the areas of licensing and capital adequacy. On licensing, there have been two major initiatives: the new Securities and Futures Act (SFA) and the new Financial Advisers Act (FAA). Public consultation documents and draft legislation of the SFA and  BIS Review 63/2001  1  FAA were released in March 2001. The Bills will be tabled in Parliament soon and are expected to be enacted by the end of this year. The SFA rationalises and consolidates into a single comprehensive legislation the Securities Industry Act, Futures Trading Act, and provisions in the Companies Act related to capital raising. It introduces a single, modular licensing regime for securities and futures intermediaries, which will enhance competition and lower compliance costs. The new legislation will also reflect initiatives that take into account industry developments brought on by globalisation and technological advancements. The FAA provides a single licensing regime and a more flexible and integrated regulatory framework for entities engaging in financial advisory activities for all investment products, and facilitates the setting of consistent professional standards across the industry. Similarly, consistent business conduct standards will govern the sale of unit trusts and life insurance across financial institutions licensed by MAS. With the proposed streamlining in licensing, financial institutions and market participants will no longer need different licences to undertake different classes of financial activities. However, they have to abide by common regulatory standards relevant to the financial activity they engage in, including activities where they are exempted from holding licences.

And the key to that is that both the Bank and the FSA should have a clear understanding of their respective responsibilities, and that they should continuously work very closely together to ensure that they keep sufficiently out of each others hair without letting things disappear between the cracks! Our ongoing relationship was formalised during the summer in a Memorandum of Understanding (MOU) agreed between the Bank, FSA and the Treasury. This defines very carefully our respective responsibilities and provides for both the Bank and the FSA to exchange information freely and to consult where our interests interact or overlap. It helpfully establishes a high-level Treasury-Bank-FSA Standing Committee, which will provide a forum in which a common position can be developed in relation to emerging problems. And, as a further means of ensuring that we are aware of each other’s concerns, the Chairman of the FSA will become a member of Court, while the Deputy Governor responsible for Financial Stability will serve on the FSA Board. In the end the success of these arrangements will depend upon the working relationships between our respective staff at all levels, and it is helpful in this context that our own supervisory staff are moving to the FSA which will help to ensure that we establish the right working relationships from the beginning. But we will need to work at these relationships continuously to ensure that they are embedded into the future.