Similarly, after the BCCI and Bearings crisis, the Bank of England introduced a series of financial regulations and also handed over its supervisory functions of  BIS Review 6/2007  1  financial institutions to the Financial Services Authority set up in 1998, with the primary objective of regulating financial markets in a meaningful manner. How has Sri Lanka fared? Sri Lanka’s financial sector is not insulated completely from global changes and their impacts. The financial authorities in Sri Lanka also faced the challenge of maintaining the overall financial system stability while trying to ensure that financial markets and intermediaries operate prudently and competitively. So they brought in necessary regulations. Over the last few decades, Sri Lanka also reduced the level of statutory pre-emptions, dismantled the complex structure of administered interest rates, laid down capital adequacy requirements, introduced prudential norms and liberalized entry norms for domestic and foreign banks. Most of these measures have the backing of specific legislation, under which the Central Bank has issued financial regulations. So, financial regulations are not a one-way street to tighten conditions but also to open up and promote competitiveness. Financial regulations are like traffic lights which stop financial intermediaries from going at the same speed in terms of mobilizing funds, borrowing, lending, introducing innovative products, taking risks and engaging in speculative activities. When they have to stop at the traffic lights, financial intermediaries not only in Sri Lanka but also elsewhere, complain that they are over-regulated.

12 To this end, MAS established the industry-led Steering Committee on SOR transition to SORA or SC-STS, in August last year, chaired by Mr Samuel Tsien (Group CEO of OCBC and ABS Chairman). The SC-STS provides strategic direction on developing new SORA-based products and markets, and serves as the key coordinating platform to engage relevant 3/7  BIS central bankers' speeches  stakeholders in support of a smooth transition. Since its formation, the SC-STS and its various Sub-Groups have made significant progress in laying the foundation to support benchmark transition by – establishing market conventions and infrastructure, building liquidity in the SORA derivatives market, conducting pilot test trades in SORA loans and bonds, and engaging market participants and end-customers on the transition. 13 I would like to thank Samuel and the Sub-Group leads for their strong and able leadership, and the great work done thus far. Samuel will be sharing more on the SC-STS transition roadmap later, and will also chart out what needs to be done in the remaining 15 months to end-2021. D Executing a smooth transition to the new landscape 14 A key part of our work in the remaining months to end-2021, is the transitioning of legacy contracts from SOR to SORA. Close to $ trillion notional value of outstanding SGD derivatives contracts referencing SOR, and 8 amounting to $ billion, will around 12,000 SOR contracts in SGD cash markets, mature after end-2021, and will need to transition. 15 Transitioning legacy contracts from SOR to SORA is a complex exercise.