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SINGAPORE’S EXPERIENCE IN DEVELOPING THE GOVERNMENT BOND MARKETS Yeo Lian Sim Assistant Managing Director (Capital Markets) Monetary Authority of Singapore.

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Presentation on theme: "SINGAPORE’S EXPERIENCE IN DEVELOPING THE GOVERNMENT BOND MARKETS Yeo Lian Sim Assistant Managing Director (Capital Markets) Monetary Authority of Singapore."— Presentation transcript:

1 SINGAPORE’S EXPERIENCE IN DEVELOPING THE GOVERNMENT BOND MARKETS Yeo Lian Sim Assistant Managing Director (Capital Markets) Monetary Authority of Singapore

2 Objectives & Requirements Building Blocks Current Issues PRESENTATION OVERVIEW

3 Why develop a Government bond market? - To cater for budget deficits in the first instance but more than that… - To develop the broader bond market.

4 Enhance spectrum of investment options The Benefits Of Well Developed Bond Markets... To better match long-term financing needs Increased efficiency through liquid markets Mobilize domestic savings for investments

5 ISSUER / INVESTOR BASE Complexity Risk/Return Deposits Bonds Equities Derivatives

6 ISSUER / INVESTOR BASE Complexity Risk/Return Deposits Equities Derivatives

7 Enhance spectrum of investment options The Benefits Of Well Developed Bond Markets... To better match long-term financing needs Increased efficiency through liquid markets Mobilize domestic savings for investments Stronger position to attract and retain issuers, investors, and intermediaries

8 NECESSARY COMPONENTS Presence of Ancillary Services Pool of Fixed Income Professionals Good Trading & Settlement Infrastructure Conducive Environment regulatory and tax structure disclosure and information flow Vibrant Bond Market

9 Investors - Fund Managers - Insurance Companies - Financial Institutions - Pension Funds - Retail Intermediaries with expertise in arranging issues Primary Dealers for market making Issuers - domestic & foreign - corporates and public sector Participants in the Debt Market

10 FOSTERING A VIBRANT GOVERNMENT SECURITIES MARKET... Step up Government Securities Issuance % increase

11 FOSTERING A VIBRANT GOVERNMENT SECURITIES MARKET... Step up Government Securities Issuance Extend Yield Curve Improve Information Flow Increase Number of Primary Dealers Develop Repo Market Develop Interest Rate Swap Market

12 Daily Turnover in Government Securities

13 Investors - Fund Managers - Insurance Companies - Financial Institutions - Pension Funds - Retail Intermediaries with expertise in arranging issues Primary Dealers for market making Issuers - domestic & foreign - corporates and public sector Participants in the Debt Market

14 NON-GOVERNMENT ISSUERS Diversified issuer base Range of different credits and industries Broad range of debt structures Encourage statutory boards, local corporates and MNCs bond issues Allow foreign entities to issue S$bonds under MAS 757 Develop the asset securitisation market OBJECTIVESINITIATIVES

15 Corporate Debt Issuance

16 Investors - Fund Managers - Insurance Companies - Financial Institutions - Pension Funds - Retail Intermediaries with expertise in arranging issues Primary Dealers for market making Issuers - domestic & foreign - corporates and public sector Participants in the Debt Market

17 DEVELOPING INVESTOR BASE Diversified investor base Tapping retail investors Increased activity from institutional investors Develop asset management industry Liberalise investments of Central Provident Fund savings Tax incentives for bond fund managers and bond investments OBJECTIVESINITIATIVES

18 BROADEN INVESTOR BASE InactiveActive Foreign Domestic

19 FOREIGN PARTICIPATION HAS BENEFITS... - Additional pool of funds - Introduces expertise and specialised knowledge - Enhances speed of market development - Develops ties to international markets

20 … AND IMPLICATIONS - Greater responsiveness to news leading to increased price volatility - Down-turn in bond market may lead to currency outflows

21 INFRASTRUCTURE Efficient settlement and clearing procedures to reduce settlement risk and transaction cost 1986 book-entry securities, DVP & finality in MAS’ books 1998 Real-Time Gross Settlement CDP linked to regional and international clearing systems for better foreign investor access

22 CURRENT ISSUES Investor Education Market Transparency Corporate Governance Electronic and Internet Revolution Asian Bond Market

23 THANK YOU


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