We hope that the interaction through presentations and panel discussions will provide ample opportunities for participants to share the experiences and challenges in their home markets. To provide a global perspective, we are honoured to have distinguished speakers from the US Securities and Exchange Commission, the UK Financial Services Authority, and the Australian Securities and Investments Commission. The presentations by leading industry practitioners will add an important market dimension. To start off the programme this morning, let me put to you three broad propositions which regulators should reconcile with, in keeping with the demands of global capital markets: (a)  First, the need for cross-jurisdiction regulatory collaboration;  (b)  Second, a growing impetus for international standards; and  (c)  Third, how can regulators and regulations respond and facilitate capital markets’ continued innovation and growth. The need for regulatory collaboration The importance of cross-border regulatory cooperation is evident from the cross-border element in the regulator’s job. Local investors buy financial products overseas while foreign funds own substantial stakes in locally-listed stocks. Capital market intermediaries compete vigorously to add value, servicing global orders. Even markets now seek direct presence, in the form of trading terminals, in different jurisdictions. Increasingly, cross-border operations are no longer conducted predominantly via telephone or fax wires, but by proprietary networks capable of channeling orders and funds across the globe almost instantaneously. Such proprietary systems combined with the reach of the internet has pooled isolated pockets of liquidity into a single global market.

Call for responsive regulation My third point concerns the role of regulators and regulations. Markets are calling and indeed demanding for regulation to be more responsive to the needs of innovation and growth. If globalisation has changed the international outlook of markets, the blurring of sectoral boundaries has transformed financial markets from within. With the mergers and acquisitions of the 1990s in the financial industry, cross-selling has become prominent today with banks seeking to distribute investment and insurance products while stockbrokers offer cash management and checking accounts. Insurance corporations on their part  BIS Review 31/2002  3  have concentrated efforts to promote investment-linked policies. The trend is in part demand-driven with customers seeking a one-stop financial house that provides convenient and integrated approach to money management. Notwithstanding the global economic downturn which has checked M&A activities, market players have not let up efforts to gain a competitive edge by consolidating their positions through alliances. The regulatory response to this has been a trend towards more integrated supervision. This allows regulators to supervise the range of activities more efficiently by taking a holistic view of the financial services market. The UK FSA is one example of integrated supervision under one roof while Australia’s Securities and Investments Commission and the Australian Prudential Regulation Authority have ambits that cut across different industries. As product lines converge, regulators in setting the rules have to be careful not to inadvertently pick and choose the winning models.