depth. product range has also increased significantly. structured products now account for more than half of the singapore dollar bond market. the asset securitisation market has also gained traction, recording a fivefold increase since 1999. to further enhance the attractiveness of asian capital markets, mas has, over the past year, worked with various governments in the region to encourage investor demand, and to address market access and market infrastructure issues. the asian bond fund or abf is one such initiative. after the successful launch of abf 1, the executives ’ meeting of east asia - pacific central bankers or emeap is making good progress on abf2 to invest in local currency - denominated asian bonds. the emeap group believes that abf2 will promote the development of index bond funds in the regional markets. we are also working with our asean counterpart on an investors seminar to take place later in the year to raise global awareness of our capital markets. the treasury industry continued to grow robustly. foreign exchange and credit trading activities were underpinned by market volatility and a slew of bond issuance in asia. to support the broad - based growth in the financial services sector, much attention was placed over the past year on manpower and skills development. the financial sector manpower conversion scheme, launched recently, will contribute to ensuring a ready supply of skilled manpower in relevant growth areas. v playing a more active role in the international arena over the last year, we have continued our active role in regional cooperation, formulation of international regulatory standards, and active dialogue with our regional and international counterparts. this reflects our recognition of the importance of closer cooperation in a highly interconnected global market. these efforts are also in keeping with singapore ’ s role as an international financial centre. we work closely with our asean counterparts to speed up financial sector liberalisation in the region. beyond asean, we are actively involved in emeap. last week, we successfully hosted the emeap governors ’ meeting as well as the first emeap - eurosystem high - level seminar. in the international regulatory front, we recently assumed the chair of the asia pacific regional committee ( aprc ) of the international organisation of securities commissions ( iosco ), and sit on the iosco executive committee. we have also assumed the chair of the emeap working group on banking supervision, which will facilitate the region ’ s discussion on implementation of basle ii. we are committed to regional and international co - operative efforts

helps to sharpen a company ’ s strategic goals. as such, it is beyond dispute that hedge funds and private equity contribute to the functioning of the economy. in what follows, i am restricting myself to hedge funds. for three reasons there are concerns that hedge funds may exert a destabilizing influence : • the first concern is the potential impact on regulated firms of a sudden collapse of highly leveraged hedge funds. banks and other regulated financial institutions are heavily involved in investing and extending credit to hedge funds. this exposure implies that large losses at one such institution could have knock - on effects for institutions closer to the heart of the financial system. in times of market stress, such effects may even threaten the stability of the financial system, as illustrated by the ltcm case in 1998. there is no certainty that such an event will not happen again. • the second concern relates to market dynamics associated with the potential for large and concentrated positions or " crowded trades " that can seriously amplify market pressures. crowded trades can arise when hedge fund managers take similar investment positions on a large scale. especially in combination with high leverage, this concentration could contribute to price instability if market conditions force hedge funds to unwind their positions simultaneously. • a third concern relates to the intense form of shareholder activism associated with some hedge funds. the prominent role of shareholders today is a direct result of two developments ; the first is the deregulating measures that have been taken in recent years by regulators. the second development concerns the changing corporate governance structure at private firms, including the relaxation of protection constructions. amid the ensuing public debate, regulators and supervisors are being called upon to assess the risks associated with shareholder activism, such as the potential violation of market integrity and uncompromising behaviour with the sole aim of maximizing shareholder value. particularly the latter may have broader financial stability implications in so far as a single - minded pursuit of shareholder maximization may in some cases undermine the stability of, and public confidence in, a financial institution, such as a bank. such institutions do after all also provide a public good, which should be taken into account when deciding upon the future strategy, and which explains why they are subject to supervision. these examples illustrate that hedge funds are generally beneficial but may under certain circumstances have a destabilizing influence. therefore, the call is on those responsible for safeguarding financial stability to ensure that checks and balances are in place to limit the risks these entities pose, while avoiding restrictive measures that may prevent