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     FrontPage Edition: Fri 21 December 2007

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 Singapore fund management industry has done well in last few years


Keynote Address by Mr Kola Luu, Executive Director, MAS, Structured Products Asia 2007 Shangri-La Singapore

An Excerpt

The Singapore fund management industry has done well in the last few years, thanks to strong economic growth as well as the increase in depth and breath of our financial markets.
Singapore has maintained its position as a major forex trading center in the world, based on the latest BIS triennial survey on OTC FX volume.
The trading of OTC commodity derivatives has also flourished over the years. Last year, total trading volume amounted to approximately US$600 billion, accounting for almost 8% of global trades.
Singapore is also home to the largest REIT market in Asia ex-Japan with a total market capitalization in the region of USD$20 billion.
The Merrill Lynch report also noted an interesting investment trend for HNWIs in Singapore. On the average, alternative investments (including structured products) account for almost 10% of total portfolio allocation for 2006.
This is in line with global averages for portfolio allocation and indicates the emergence of “new wealth”. This represents a group of young and sophisticated entrepreneurs who often prefer to play a more active role in the management and investment of their wealth.
To meet the needs of these investors, banks provide structured products customized to clients’ investment objectives. This trend is likely to catch on in other parts of Asia as financial markets in the region matures and as transparency, governance, disclosure as well as risk management improve over time.
However, as structured products may involve multiple risk components, proper risk disclosure should be provided by relationship managers to the clients.
Investors looking to invest in relatively more complex structure should also exercise extra caution before entering into such financial transactions. Many governments in the region have begun developing legislation and guidelines to provide investors with the information necessary to understand the nature and risk associated with complex investments.
As an integrated financial services sector regulator, MAS also continually reviews existing regulations to ensure that they remain relevant to market developments.
For example, MAS has just completed a final phase of amendments to the Securities and Futures Act (SFA) and the Financial Advisor Act (FAA) which are aimed at
 • enhancing MAS’ supervisory oversight of capital markets services and financial advisers’ license holders;
 • increasing the responsiveness of MAS’ regulatory framework to market innovation.
MAS had also introduced a set of risk management guidelines earlier, which highlighted the importance of senior management oversight, strong risk management processes and operating procedures and need for competent personnel in the risk management, control and audit functions.
While growth in the financial industry has been robust, the need for manpower and expertise continues to be a key factor for continued success.
In consultation with industry, MAS initiated the Financial Sector Manpower Conversion Scheme in 2004 to help re-channel manpower quickly to new growth areas in the financial sector. This is done through customised conversion training programmes in partnership with partners such as the Wealth Management Institute (WMI) and ACI Singapore.
Over the last few years, WMI’s flagship Masters of Science in Wealth Management has provided the industry with a pool of highly qualified and competent wealth managers.
Additionally, the programme has been crafted to provide wealth managers with expertise on specific asset classes, including a module on Structured Products, aimed at presenting participants with a good understanding of the risk and return of structured products, and their use in portfolio management...

Full Text of Speech

Source: News 6 Dec 2007

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Public Holidays CHRISTMAS DAY is the next public holiday. It falls on 25 December 2007.