Today, four out 5 2/7  BIS central bankers' speeches  of the top 10 global exchanges are in Asia 5 and Asia contributes nearly half of the total number of IPOs globally6. During the same period, Asia’s bond market has grown at an annualized growth rate of 24% to reach USD 4.7 trillion in 2015, accounting for 9% of global corporate bond market outstanding volumes7. Some analysts8 estimate that the size of the financial system in Asia could reach USD 200 trillion by 2030. This is four times its current size and more than double the projected size of the U.S. financial system. Developments in global markets will be increasingly driven by Asia’s growing economic and financing needs. This is well-evidenced in the wealth management9 space. In 2015, as global high networth individual (HNWI) wealth grew at a modest 4% globally and just 2% in North America, Asia-Pacific wealth expanded by 10%. 2015 also became the year that AsiaPacific overtook North America for the first time to become the region with the most HNWI wealth and population globally10. HNWI growth in Asia-Pacific has doubled over the decade and if the trend persists, Asia-Pacific will represent two-fifths of the world’s HNWI wealth by 2025. In infrastructure financing, Asian financial institutions will be well placed to meet the significant financing needs of around USD 8 trillion of infrastructure projects in Asia, as estimated by the Asian Development Bank (ADB). In commodity markets, Asia’s influence has also grown stronger.
The major dealers and their principal supervisors met at the Federal Reserve Bank of New York about two weeks ago to review progress and discuss next steps. The dealers are now in the process of reaching agreement on a new set of proposals designed to build on the progress to date and produce a more mature, efficient and operationally robust post trade processing infrastructure for the OTC derivatives market. I want to conclude with a few observations about the role of supervision in encouraging progress in both these areas of risk management and the infrastructure for these markets. We live in a system in which nonbank financial institutions play an increasingly important role in a wide range of financial markets, in which the differences between the activities of bank-centered financial institutions and nonbanks has substantially diminished, and in which the largest banks and investment banks in the world compete together in the U.S. market and in other major markets. These changes have many positive implications but they also mean that differences in the incentives faced by institutions with different supervisory and regulatory regimes can have larger competitive effects, and the effects of regulatory arbitrage can reduce the impact of changes applied only to regulated or supervised institutions. They suggest that adverse developments outside the banking system, such as the failure of a major nonbank financial intermediary, can potentially cause greater damage to the core of the financial system than might have been the case in the past.