The Basel Committee has sought to further embed risk proportionality within its framework. One such example is the simplified alternative to the Standardised Approach to Market Risk, or SA-MR in short. This simplified alternative will make it easier for supervisory authorities to implement the market risk rules for less complex banks. For such simplified approaches to be fit-for-purpose, it has to take into account the differing conditions across a broad range of jurisdictions. This is especially so for emerging market economies with less complex banking systems. In this respect, forums such as the Basel’s Regional Consultative Group (RCG) and the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP) can be important platforms for regional regulators to continue to provide feedback or regional concerns. Where the outcomes from impact studies are less certain, the Basel Committee has been careful not to rush into a particular rule. One example is the treatment of sovereign risk exposures. In this case, the Basel Committee has decided to put out a discussion paper to solicit further views. 8 The Financial Stability Institute (FSI) has also recently published an insightful report on proportionality in banking regulation. The report provides a very useful overview of the proportionality approaches in different jurisdictions. 9 Another example is the Financial Stability Board’s (FSB) evaluation of effects of reforms. The initial focus is on infrastructure financing, which will be relevant to Asia given the immense infrastructure demands.

As commodities become the flavour of the day, market participants should ensure that they understand the risks as they participate more actively in the markets. In their eagerness to  2  BIS Review 90/2008  ride the commodities wave, banks and other intermediaries should put in place appropriate risk management systems and processes, ensure they have adequate resources including qualified staff, and uphold proper market conduct. Investors too, should carefully evaluate complex structures as they seek attractive returns. Singapore as a commodities hub Singapore has historically played an important role to connect importers and exporters. Besides being strategically located, Singapore offers a high level of connectivity with its efficient infrastructure and business friendly environment. Today, Singapore is a key aviation and shipping hub, and an international financial centre. In the area of commodities, over 230 global trading companies have their offshore trading, marketing and procurement operations in Singapore. We enjoy the reputation as the top energy trading hub in Asia, and is increasingly a location of choice for other sectors including agri-commodities, metals and minerals. Singapore continues to be the hub for over the counter ("OTC") commodities derivatives trading in the region, capturing more than 10% of global OTC commodities. In May 2006, the SGX launched a central counterparty clearing facility or SGX AsiaClear, for OTC commodities trading to mitigate counterparty risks and create efficiencies for the market place. Today, SGX AsiaClear has seen growth in energy, freight and petrochemical derivatives and potentially agriculture commodities.