Yeo Lian Sim

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Yeo Lian Sim Assistant Managing Director (Capital
Markets) Monetary Authority of Singapore
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PRESENTATION OVERVIEW

• Objectives Requirements
• Building Blocks
• Current Issues

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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.
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The Benefits Of Well Developed Bond Markets...
To better match long-term financing needs
Increased efficiency through liquid markets
Mobilize domestic savings for investments
Enhance spectrum of investment options
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ISSUER / INVESTOR BASE
Complexity
Derivatives
Deposits
Risk/Return
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ISSUER / INVESTOR BASE
Complexity
Derivatives
Deposits
Risk/Return
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The Benefits Of Well Developed Bond Markets...
To better match long-term financing needs
Increased efficiency through liquid markets
Mobilize domestic savings for investments
Enhance spectrum of investment options
Stronger position to attract and retain issuers,
investors, and intermediaries
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NECESSARY COMPONENTS

• Conducive Environment
• regulatory and tax structure
• disclosure and information flow

Good Trading Settlement Infrastructure
Presence of Ancillary Services
Pool of Fixed Income Professionals
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FOSTERING A VIBRANT GOVERNMENT SECURITIES
MARKET...

• Step up Government Securities Issuance

76.6 increase
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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

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Daily Turnover in Government Securities
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NON-GOVERNMENT ISSUERS
OBJECTIVES
INITIATIVES

• 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
Sbonds under MAS 757 Develop the asset
securitisation market
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Corporate Debt Issuance
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DEVELOPING INVESTOR BASE
OBJECTIVES
INITIATIVES

• 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
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BROADEN INVESTOR BASE
Foreign
Domestic
Inactive
Active
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FOREIGN PARTICIPATION HAS BENEFITS...

• - Additional pool of funds
• - Introduces expertise and specialised knowledge
• - Enhances speed of market development
• - Develops ties to international markets

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AND IMPLICATIONS

• - Greater responsiveness to news leading to
  increased price volatility
• - Down-turn in bond market may lead to currency
  outflows

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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

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CURRENT ISSUES

• Investor Education
• Market Transparency
• Corporate Governance
• Electronic and Internet Revolution
• Asian Bond Market

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THANK YOU