RESTRUCTURING OF THE SINGAPORE GOVERNMENT SECURITIES MARKET

Abstract

Though Singapore is one of the world's important financial institution, she is now at the crossroads and is encountering a rapid changing external environment. While other international financial markets are facing the problems of keeping regulations apace of financial innovations, the Singapore government must always bear the task of prodding our financial markets along. Unless the Government start to adopt some urgent measures in response to the new financial trends, we will gradually be left behind in terms of market development. In the case of bonds (government bonds and corporate bonds), the necessary conducive fiscal and regulatory environment to facilitate the growth of an active capital market, were simply not present. All international capital markets are experiencing rapid changes and risk management industries have been set up in major financial centres. Not wishing to be left out of the financial scene, the Monetary Authority of Singapore has implemented drastic changes to restructure the Singapore Government Securities Market (SGSM) so as to serve as an important pillar for the further development of the capital market. This academic exercise has one fundamental objective: to provide the students of money and banking an understanding of the way in which the SGSM actually functions. The entire academic exercise tends to gravitate towards the description of the old and new SGSM, the participants and the mode of operations under both systems. In Chapter I, some coverage of theoretical knowledge, which are essential to an understanding of the attributes of government securities and the functioning of the capital market, are provided. Some bond mathematics, together with the term structure of interest rates theories are given in the appendices. A brief historical review of the old market as well as its institutional details are presented in Chapter II. Chapter III provides the coverage of the new legal and regulatory framework of the restructured SGSM. Finally, the last chapter assesses the rnark9t performance and projects the growth potential of the market in future. These sweeping changes are part of the Government's well-calculated desire to nurture and groom Singapore into a premier financial centre by the· next decade and to become the "Switzerland of Asia" for risk management, fund management and capital markets. With active promotion and measures undertaken to overcome the teething problems, the Singapore Government Securities Market can become a leading capital market in the region.