##ification ” is inevitable as more financial products are standardised and traded electronically. we are likely to see more algorithmic trading which do not require human intervention in trading decisions. as the cost of setting up trading platforms declines, trading venues including exchanges, electronic crossing networks, multilateral trading facilities will proliferate and compete for liquidity. 42. we have seen significant investments in technology to reduce latency and design in eversmarter algorithms to trade more efficiently. whether such innovations have led to more efficient markets for end - users to invest and to manage their risks are still subject to some debate. regulators worldwide also have been keeping abreast with innovative developments to understand newer forms of risks and market linkages, as well as to embrace the opportunities that these may bring. i will highlight a few examples that will be relevant to the world of exchanges. 43. i think we can expect innovations in distributed ledger technology that will be applied to the “ plumbing ” of financial markets, areas which we hitherto tend to take for granted. a distributed system should in theory improve resilience as it theoretically removes the risk of a single point of failure. if the clearing and settlement of equity trades can be reduced from the existing standard of 2 – 3 days to as little as 10 minutes, this will further reduce settlement risk. some have said that the near instant settlement of transactions can transform the financial system and free up billions of dollars ’ worth of collateral that is locked up during the trade settlement period. 44. technology can also lead to “ commoditisation ” of certain financial intermediation functions. just 15 years ago, the cost of brokerage for retail investors was as much as 1 %. but now our retail investors are able to access global markets at significantly lower brokerage costs. there will be no let up on cost pressure. we used to hear about brokerages such as e - trade offering stock trading at a $ 9. 99 flat commission ; now we have the likes of robinhood in the u. s. offering retail trading for free. 45. the advent of “ robo advisers ” also suggests that investors can access automated investment advice on their smartphones, without the need for human interface. some bis central bankers ’ speeches commentators believe that computer algorithms can essentially provide customized advice to investors at a fraction of costs compared to human financial advisers. 46. the interplay of new technology, different platforms and new players inevitably suggests faster and cheaper options ahead. these can impinge on the

ravi menon : building a culture of trust in the financial industry opening address by mr ravi menon, managing director of the monetary authority of singapore, at the monetary authority of singapore - singapore academy of law conference, singapore, 23 january 2015. * * * chief justice sundaresh menon justice steven chong mr timothy massad, chairman, us commodity futures trading commission distinguished guests, colleagues, ladies and gentlemen, bad behaviour in finance six years ago, the global financial crisis tipped national economies into recession and brought to their knees some of the most hallowed names in the financial industry. but the biggest casualty of the crisis could well be trust : • trust between regulators and financial institutions ; • trust among financial institutions ; and • trust that the public places in the financial industry – that their bankers are honest and their financial advisors are acting in the best interest of their clients. and six years after the crisis broke, the global industry continues to be dogged by shocking revelations of financial malfeasance, mis - selling, and dishonesty. • in the us, large banks are paying billions of dollars to settle charges against them for mis - selling mortgage - backed securities which led to massive losses for their buyers. • in the uk, over 13 million complaints have been made against retail banks for the aggressive mis - selling of so - called payment protection insurance ( ppi ). • we read of traders in banks circumventing internal rules to make outsized market bets that subsequently resulted in large losses for these banks. • and in financial centres across the world, including singapore, regulators have uncovered attempts by traders at several major global banks to manipulate key financial benchmarks used to set rates for loans and foreign exchange contracts. little wonder that global surveys show that levels of trust in the financial industry are lower than ever. • according to edelman, a public relations firm, banking and financial services ranked last among 15 industries that the public trusted “ to do what is right ”. 1 • in countries most affected by the financial crisis and its aftermath, levels of trust are lower still – barely 30 % of the public in europe trust their banks. edelman trust barometer, 2013 and 2014. bis central bankers ’ speeches why trust is critical to finance financial products and transactions can be quite complex and information asymmetries often place financial institutions in a more advantageous position compared to their customers. • trust that the bank is sound is critical for savers to keep their monies in bank accounts and for borrowers