After a robust fourth quarter in 2015, the pace of growth slowed in the first quarter of 2016. According to the first official estimate, annualised real GDP increased by 0.4% in the first quarter. However, this deceleration is not a sign of a more fundamental slowdown. If we disregard short-term volatility, an upward trend is discernible. Available indicators thus point to a continuation of the moderate but steady recovery that has prevailed since the beginning of the year. This would suggest that growth is likely to gather pace in the second quarter. The gradual improvement in the international environment will also benefit Switzerland. Exports are likely to continue to recover. Until now, the positive development was largely driven by pharmaceutical exports. As global economic activity gradually picks up, other industries too are likely to show signs of recovery. Exports of machinery, precision instruments and metal goods have rallied slightly since the beginning of the year. Utilisation of production capacity in manufacturing should continue to improve. This is likely to stimulate corporate investment and have a positive impact on the labour market. Various industry surveys confirm these emerging signals. The employment outlook has brightened somewhat recently. We expect the unemployment rate to stabilise in the second half of the year. We still anticipate real GDP growth for 2016 as a whole of between 1% and 1.5%. The continuation of this moderate recovery and the impact of efficiency measures already taken will help industry to improve margins. However, many challenges remain.

Clearly, we cannot avoid all overlaps and even some differences between MAS’ regulations and exchanges’ rules in certain areas such as those relating to financial resources and business conduct requirements. This is in a way inevitable as MAS’ regulations have to cover all capital markets intermediaries regardless whether they are members of exchanges or not. 4  BIS central bankers’ speeches  Exchanges, depending on the type of products that they offer, may need to impose differentiated requirements on different members depending on the assessment of product risks and credit worthiness of their members, which may or may not be regulated by MAS. Protocols on information sharing between MAS and exchanges’ SRO units will hence be mapped out. 30. At a broader level, we believe this change will lead to greater supervisory efficiency and better system-wide risk management. While exchanges will retain their regulatory responsibilities in terms of member supervision, their resources can be concentrated on the supervision of members with significant risk exposures on their respective exchange. This can include members which are not under MAS’ oversight such as those based overseas. Market surveillance 31. The MAS on our part will be enhancing our surveillance capabilities both within and across markets. The presence of multiple exchanges, each focused on its own markets, can give rise to blind spots as each exchange may not have the complete picture of common members’ exposure and activities. There are also certain markets such as in the OTC derivatives space that are not under the direct surveillance of exchanges. 32.