treatment of securitised assets, as well as disclosure, separation and other requirements for the various roles that banks take on in a securitisation transaction. the guidelines seek to define clearly the roles, responsibilities and risks that banks retain or undertake, when they participate in a securitisation transaction. they also ensure that banks hold appropriate capital against the risks they accept. thus, a bank that has securitised its assets will be granted capital relief only where the transfer of risks and rewards of the securitised assets has been effective and complete. the internet and its impact on the securities industry the second major issue is the impact of technology and the internet on capital markets. in the securities industry, the internet has caused fundamental change, slicing the value chain more and more finely, and recombining it in novel configurations. functions previously offered as a package by brokers, such as analysis and advice, recommendation and order routing, are being separated and broken up. new entities, such as aggregators or navigators, have emerged, offering hitherto - unseen types of services. these changes will bring major benefits to the industry and investors. firstly, the internet has fostered a free flow of investment information. with a surfeit of news, financial institutions are rethinking their business models. research and analysis previously available to be published as notice 627. to be published as notice 628. similar guidelines will be issued to finance companies and merchant banks. only at substantial fees to institutions and high net worth individuals are gradually becoming available to online retail investors as well. 6 secondly, the internet offers increased business opportunities and potentially limitless reach. thirdly, the internet offers increased scope for cross selling financial products. successful online firms like charles schwab and e * trade are leveraging on their huge customer base to diversify into banking, bill payment and other areas of services. 7 lastly, do - it - yourself finance facilitated by the internet allows institutions to cut whole layers of customer administration costs. the internet is reducing the cost of capital, at the expense of the spreads that intermediaries traditionally enjoyed from a proprietary informational edge. this reduction of what has been called “ knowledge float ” will benefit both lenders and borrowers. but at the same time, the internet means new challenges. the same borderless nature can mean footloose customers and businesses. cyberspace so blurs physical distinctions and facilitates convenient access that financial institutions can uproot

final principle deals with overseas websites. mas will apply the same licensing principles to overseas websites which specifically target singapore residents, as it does to local websites. this is to ensure that foreign and local internet players are treated on the same regulatory basis. portals which reproduce investment research reports should ( a ) attribute the report sources accurately, ( b ) should not exercise editorial control over, or modify contents of reproduced reports, and ( c ) should not endorse or otherwise comment on the reports. the webpages of such entities should contain disclaimers to the effect that the views expressed are not those of the entities. websites providing prospectuses and application forms in a passive manner should display disclaimers to the effect that they do not have the intention of inducing investors to subscribe for securities. going forward several of the new licensing principles can be implemented based on the existing securities industry act and licensing framework. others will require amendments to the legislation. the new provisions will be included in the forthcoming financial advisers act and the omnibus securities and futures act, and announced in 2001. mas has already received a number of new applications which fall under the proposed securities licensing framework. these are currently being evaluated. as i have just discussed the licensing principles broadly, interested parties should approach mas to discuss the details of the revised licensing framework in relation to their business models. mas will also be seeking further comments from relevant industry players on these changes. conclusion the vitality and dynamism of global capital markets have ushered in challenging times for the financial services industry. with technology breaking down geographic and sectoral boundaries, links between markets, institutions and instruments will flourish. experience in developed economies show that financial services, notably stock trading, can take rapidly to the internet. this should be no surprise. as an economist online finance survey recently described, financial institutions deal in a product - money - that has long been accepted as “ virtual ”. unlike a piece of clothing, account - holders are happy to accept their money represented as figures on an atm screen, or by a credit or smart card. 13 the new financial landscape calls for a tripartite, complementary response from regulators, industry and investors. the mas as regulator will foster healthy market practices, while maintaining a sound overall investment environment. at the same time, in a democratised environment, investors need to recognise that there is little substitute for self - education, and thereby exercise greater caution in making individual investment decisions. finally, industry participants need to set high professional standards and observe an exemplary