I would nonetheless characterise the broad trends of the past few decades as follows:  Firstly, there has been an increase in electronic trading across most markets. This is particularly the case in markets for inherently liquid instruments – i.e. those which are simple and homogenous, such as equities (Chart 3). 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Second, at least initially, the migration from voice to electronic trading has allowed for far greater transparency around the prices at which market participants are both willing, and able, to transact. This in turn has given rise to a plethora of new data, which combined with advances in technology, has led to the growth of algorithmic trading, including that at high frequency (Chart 4). And, for the purposes of this speech, by ‘fast markets’ I mean those markets where these trends have gone furthest: most obviously major equity, foreign exchange (FX) and futures markets. In these markets, there is less need for intermediaries to warehouse risk, due to the inherent liquidity characteristics that attract a wide range of participants, making it easier to find a near-instant match between buyers and sellers. This has allowed the emergence of new technology-focused, smaller, non-bank, market participants that specialise in using algorithms to execute and route orders at high speed. Chief amongst these are principal trading firms (PTFs), who trade on a proprietary basis, using sophisticated technology (Chart 5).
2  BIS Review 61/2001  d.  Fourth, the consolidation should not lead to loss of service for small depositors, for whom affordable banking services are a necessity. e.  Fifth, any cross-border partnerships should not result in the foreign partner taking control of a Singapore bank. I will elaborate on these five considerations in turn. Managing the integration Consolidation, whilst necessary for the local banks to be competitive, is not in itself sufficient to produce strong banks. Having merged, the banks will have to integrate and rationalise different management teams, information and risk management systems, and internal control procedures. The reality is that some mergers work while others do not. Good execution of a merger will produce a stronger bank, by yielding the expected synergies and cost savings. Poor execution will only lead to a more unwieldy and riskier bank. A larger scale and wider range of activities will demand stronger and more institutionalised management. Singapore banks have benefited from having their principal shareholders, including family shareholders, play an important role in overseeing the banks, although most no longer run the management. The controlling families have had the entrepreneurship and business acumen to build up the banks, and their long-term interests were substantially aligned with those of the banks. This situation currently serves us well, but is not likely to endure over the longer term.