Mr Walt Lukken, President and CEO of the Futures Industry Association (FIA)
Mr Bill Herder, Head of Asia-Pacific of the FIA
Distinguished guests,
Ladies and gentlemen,
1. Good morning. I am delighted to join you at this year's Asia Derivatives Conference.
2. I want to extend my sincere appreciation to FIA for bringing the Asia-Pacific derivatives community together here in Singapore for the past 17 years.
3. This annual Conference has become a vital enabler for market participants to exchange ideas and strengthen partnerships, while providing opportunities for constructive industry dialogue with regulators.
4. I commend FIA for their vision in sustaining this tradition. On behalf of the regulatory community, thank you, Walt and Bill, for your continued vision and commitment.
5. Today, I will first set the backdrop on recent trends and developments before sharing MAS' strategic priorities for the capital markets, with a special focus on technology
Recent Trends and Developments
Derivatives playing a crucial role in uncertainty
6. The global economy has shown resilience to trade and geopolitical shocks, but downside risks remain.
• Following the announcement of Liberation Day tariffs earlier this year, measures of geopolitical risk and trade policy uncertainty have improved. However, they remain elevated relative to a year ago.
• Extreme tariffs and all-out retaliatory trade wars have been avoided thus far, but continued uncertainty in trade policies could prolong firms' reluctance to make new investments.
7. Vulnerabilities in the global financial system are also growing at this late stage of the business cycle.
• Equity markets are seeing unease over relatively stretched valuations concentrated in the technology and AI sectors.
• In sovereign bond markets, there are concerns over fiscal sustainability, as observed via a synchronous rise in government bond term premia.
• Recent prominent credit losses involving private credit funds have accentuated rising corporate credit risks, even as credit spreads are at their tightest historically, and are thus prone to sharp reversals.
8. On a positive note, global derivatives markets have continued to expand, which could help to mitigate some of these risks through increasing portfolio diversification, facilitating risk hedging and improving market depth and liquidity.
• In 2025, over 25 billion exchange-traded futures contracts changed hands from January to October—a 7.9% increase over the same period in 2024.
• Closer to home, activity has also risen in Singapore, where SGX reported a 17% increase in its derivatives volume for FY 2025.
9. Looking ahead, derivatives markets will continue to play a vital role in efficient capital allocation, risk transfer, and price discovery. It is a fairly mixed picture. But we will have to remain vigilant to respond to market volatility and disruption to ensure that markets continue to function smoothly, fairly and transparently.
Technological developments
10. At the same time, technological innovation is reshaping the financial market landscape. It bears repeating: the future of finance will be shaped by technology. Let me highlight two areas of interest.
11. The first area is tokenisation through the use of Distributed Ledger Technology, or DLT.
• Interest in tokenisation arrangements among market participants is growing steadily. A 2025 survey by Ernst & Young and Coinbase highlighted that among institutional investors interested in tokenised assets, 11% are already invested and another 61% expect to start investing by 2026.
• Commercial adoption has also expanded to a wider range of products and activities, including the tokenisation of money market funds and for collateral management.
• These developments can potentially make the posting of margins more efficient, addressing collateral challenges currently faced in cleared derivatives markets.
• For the moment, tokenisation remains at an early stage of development, constituting a small part of total asset markets. For example, while the assets held in tokenised money market funds stood at approximately $9 billion in October.
• However, positive growth estimates across the industry suggest tokenisation warrants close attention. According to a 2024 study by McKinsey, tokenised market capitalisation across asset classes is estimated to reach about $2 trillion by 2030.
12. The second area is artificial intelligence, or AI.
• While AI is not a recent phenomenon, significant innovations in recent years have ushered in "new" AI technologies. This includes Generative AI and large language models, which can create content and insights, as well as Agentic AI, which can autonomously make decisions and perform multi-step tasks on behalf of humans.
• In capital markets, we have observed that there are use-cases across traditional AI and "new" AI that help to enhance operational efficiency, improve decision-making and process information at scale.
• Broker-dealers are integrating AI systems to support algorithmic trading, while exchanges and financial market infrastructures are using AI to enhance transaction processing, automation and market surveillance.
• More generally, AI is being used to augment compliance and risk management functions.
• Although AI adoption is still at an early stage, the financial sector is investing in and implementing AI faster than other industries, with investments in AI expected to grow from $35 billion in 2023, to close to $100 billion by 2027.
• It is encouraging that FIA has worked with market participants to update its Best Practices for Automated Trading Risk Controls and System Safeguards to address risks from both existing and evolving technologies, including AI.
MAS' Strategic Priorities
13. It is clear that technology will transform markets and how they operate, both front and back end. What do these technological trends mean for financial supervisors, you may ask? For MAS, regardless of the technological evolution or volatility facing capital markets, our core mission remains—that is to promote markets that serve companies and consumers with Fairness, Integrity and Transparency.
14. We take a technology-neutral approach to our mission, but we recognise that technology will shape the future financial landscape. It is therefore imperative that our regulatory approach continues to balance effective regulatory oversight and support technological advancement and innovation at the same time.
15. It is with this in mind that I have chosen the acronym "I-S-P" to outline my message. facilitating Innovation, sharpening our toolkit for Supervision, and Partnering with stakeholders to shape the path ahead.
16. Conventionally, ISP refers to "Internet Service Provider", but today, I am using it to encapsulate my message.
17. Just as an Internet Service Provider enables seamless connectivity whilst maintaining network security and stability for its users, MAS seeks to enable a trusted and innovative capital market that benefits financial institutions and customers through:
• Facilitating Innovation;
• Sharpening our Supervisory capabilities; and
• Partnerships with ecosystem stakeholders to shape the path ahead
Facilitating innovation
18. First, on facilitating innovation.
19. Let me elaborate on our efforts in response to developments in tokenisation and AI.
20. I mentioned earlier that tokenisation is still at an early stage of development. Market participants have told us that there are a few important hurdles to cross before tokenisation can scale.
• First, the need for legal and regulatory certainty for market participants and investors;
• Second, enabling interoperability across networks or protocols through common standards; and
• Third, the availability of safe and reliable settlement assets.
21. Let me start with the importance of legal and regulatory certainty.
• We often get questions from market participants and investors about whether tokenisation arrangements are backed by the force of law and are compliant with regulatory standards.
• This is due to the presence of different technologies and operating environments, and the various structuring options for tokenised assets. Let me share this from both the domestic and international vantage points.
22. As a first step towards providing regulatory clarity, I updated last year that MAS had embarked on a review of existing rules and regulations to identify potential uncertainties that could deter tokenisation activities.
23. Following the review, we recently published a Guide on the Tokenisation of Capital Markets Products.
• This Guide provides guidance to the industry in areas that could be deemed unclear, such as the regulatory treatment of tokenised capital markets products and on applicable disclosures.
• To put it simply, we adhere to the mantra of “same activity, same risks, same regulatory outcome” and we take a technology-neutral approach. The use of DLT can be seen to be a wrapper around the capital market product – be it a bond or equity, for instance. We will regulate it in the same way as a traditional security.
• However, because the use of the new technology may introduce new risks, these must be properly managed and disclosed to customers. For instance, if the token represents a bearer type of instrument or whether there is a separate central source of truth, as well as the risks associated with the new custody arrangements using blockchain technology.
• The technology and use-cases will keep on evolving. We will continue to update this Guide to provide clarity on the application of our requirements as tokenisation activities develop.
24. From an international standpoint, we will also continue to contribute to international work on tokenisation and its implications globally.
• Last month, a report on Tokenisation was published by IOSCO. MAS was the lead of the Tokenisation Working Group under the IOSCO Fintech Task Force, which is also chaired by MAS.
• The report examines current use-cases of tokenisation in capital markets, identifies potential implications on market integrity and investor protection, and takes stock of regulatory responses taken by jurisdictions thus far.
• Through our involvement in IOSCO, we will continue to monitor these developments and provide appropriate updates to the international community calibrate our regulatory approach.
25. Second, standardisation and interoperability are needed to enable tokenised assets to be transacted seamlessly across networks and mitigate liquidity fragmentation.
26. Through Project Guardian, MAS has been working with a consortium of global policymakers and major financial institutions to promote the development of industry standards and frameworks for tokenised assets and digital asset networks.
• To date, we have published frameworks for funds, bonds and FX and will continue to do more. We deem these to be global public goods.
27. MAS is also working with industry partners and policymakers to promote network interoperability under the Global Layer One initiative.
• We have provided principles, specifications, and templates to foster an ecosystem of compatible, regulatory-compliant, shared ledger infrastructures.
• The idea is to find a way to connect the different walled gardens through common bridges. The analogy is to build highways and roads that can connect different villages and enable cars and people to travel across.
• We invite network developers and market participants to collaborate with us in facilitating standardisation and enhancing interoperability.
28. Third, there needs to be an available pool of safe and reliable settlement assets to ensure tokenised transactions can scale globally and robustly. MAS is working with global industry partners to explore the use of various potential settlement assets.
29. We recently launched BLOOM (which stands for Borderless, Liquid, Open, Online, Multi-currency). It is the settlement equivalent of Project Guardian and supports industry trials with tokenised bank liabilities and regulated stablecoins for settlement.
• BLOOM members will collaborate to address challenges and opportunities of common interest to the industry, such as (i) distribution and clearing of settlement assets, (ii) programmable controls to enhance and automate compliance checks, as well as (iii) agentic payments.
• We welcome financial institutions, as well as clearing and settlement network operators, to conduct trials under this initiative.
30. In the case of Central Bank Digital Currencies, we established the Singapore Dollar Test Network (SGD Testnet), an operational shared ledger infrastructure that enables financial institutions to test the settlement of tokenised financial assets using wholesale CBDC.
• Building on the recent successful live trial for interbank overnight lending transactions involving our three local banks, we are planning a future trial to issue tokenised MAS Bills to our Primary Dealers which will be settled using this CBDC.
31. Having addressed tokenisation, let me turn to our second area of technological focus: artificial intelligence.
32. As financial institutions expand the scale and scope of AI use, risks such as model, data, technology and third-party risks will materialise more saliently. If these risks are not managed properly, there will be adverse impact on decisions made by organisations or advice given to customers.
33. To foster robust governance and risk management practices in the industry, MAS issued a set of Guidelines on AI Risk Management for consultation last month.
• The proposed Guidelines apply to all financial institutions and set expectations for them to identify AI risks and to implement controls across the entire AI life cycle, appropriate to the scale and risk of AI use.
• The Guidelines are principles-based, setting up flexible guardrails to enable responsible innovation in a fast-moving space.
34. MAS will also continue to contribute to international regulatory work on AI at IOSCO, to keep a pulse on global developments and emerging risks relating to AI.
• In March this year, IOSCO published a report on AI detailing uses of AI systems in financial products and services, and examining the issues, risks and challenges of AI use.
• In its next phase of work, IOSCO aims to identify good practices and guidance to assist market participants in their disclosure and governance of AI use.
Sharpening focus areas for supervision
35. We have discussed "I" and I have provided examples of how we facilitate innovation. Our second priority is to sharpen our focus areas for supervision on two fronts:
• First, in addressing risks where there is reliance on third-party service providers, who are typically technology service providers.
• Second, where we ourselves can use technology for our supervisory efforts.
36. Operational resilience is increasingly a key priority for regulators, in view of growing digitalisation and interconnectedness of financial markets.
• In particular, the risks from third-party service providers have come into focus, following high-impact incidents originating from these entities, such as the Crowdstrike disruption in July 2024.
• Importantly, the use of external providers does not reduce a financial institution’s accountability in ensuring resilience of services delivered. In short, operations can be outsourced, but accountability and responsibility cannot.
37. MAS has set out expectations in its Guidelines on Outsourcing to ensure effective due diligence, rigorous oversight mechanisms, strong business continuity plans and well-defined exit strategies in the management of outsourcing arrangements.
38. To strengthen financial institutions' oversight of third-party arrangements, MAS intends to expand existing expectations on outsourcing to cover third-party arrangements.
39. Another area of focus has been to make use of technology for supervisory purposes. Let me share an example where we use technology to assist us in raising standards of fair dealing across the financial sector and to help improve the experience of customers dealing with financial institutions.
40. Last year, MAS expanded the Guidelines on Fair Dealing to apply to all financial institutions, and to all products and services that they offer to their customers. While this is a great idea in concept, there are implementation hurdles to overcome.
41. There are tens of thousands of products that are sold to consumers each year by approximately 47,000 Financial Advisory Representatives. It is impossible for the financial institutions themselves, let alone MAS, to perform surveillance without the help of technology.
42. To help support fair outcomes for customers, MAS is leveraging Supervisory Technology, or SupTech, to sharpen its risk surveillance of financial institutions.
• For example, as financial institutions increasingly take to social media for marketing, and their customers increasingly use it to air their views about them, we have developed capabilities around social media monitoring. This helps us to track what might be trending and highlight areas to focus on
• As part of this, we have leveraged Natural Language Processing (NLP) techniques to flag regulatory concerns such as greenwashing, issues with certain products, or financial institutions with heightened negative sentiment, which could provide early risk warning signals to supervisors, or which FIs to invite over for coffee.
• We are also using predictive analytics to focus our intervention effort on Financial Advisory Representatives that are at higher risk of market misconduct. This allows for more targeted action and better prioritisation of our scarce supervisory resources.
Partnering with stakeholders to shape standards
43. I have touched on "I"—Innovation; and "S" for Supervision. Finally, MAS' third priority is "P" for partnership with stakeholders to shape the path forward. Let me highlight two illustrative examples.
44. First, through MAS' Fintech Regulatory Sandbox, we are partnering the industry to facilitate innovative experimentation while addressing emerging risks.
• A recent experiment in our sandbox is the Automated Market Maker (AMM) trading model, which was tested by one of our financial institutions to execute trades using a set pricing algorithm instead of traditional bid-ask price discovery.
• During the experimentation, our supervisory teams closely engaged the financial institution to study the risks posed by this model, validate our safeguards, and gather market feedback.
• MAS has since incorporated some of the safeguards that were designed to address AMM-specific risks into formal guidelines to provide greater clarity to other prospective AMM operators.
45. Second, through MAS' review of the Equities Market, which concluded in November, we leveraged collaborative engagements to ensure our regulations are attuned to market realities.
• We consulted widely across diverse stakeholders and held focus group discussions to solicit suggestions and understand specific areas of challenges.
• This process helped to inform our decision to meaningfully streamline our regulatory regime, to address industry pain points and foster an environment that is both pro-enterprise and pro-investor confidence, while upholding high standards.
46. This will continue to be our posture as we face the advent of technology and the innovation that comes with it.
• Looking further ahead, there is another technological wave on the horizon—Quantum Technology—that will require our collective preparation. That is another story for another day.
47. Meanwhile, let me reiterate that regulators certainly do not have the monopoly of ideas; the industry certainly knows more about how it operates than we do.
• Our role is to hold standards high by reviewing our regulations regularly to see what makes sense and what needs to be adjusted or enhanced.
• While we want to keep standards high, we also want regulations to be meaningful and fit for purpose, and we will continue to partner with the industry on this journey.
Conclusion
48. Let me conclude. We stand at an inflection point in financial markets. The technological developments I have outlined today—from tokenisation to AI—are not distant possibilities but present realities that are already reshaping how we operate.
49. Market developments will continue to present considerable opportunities, but the pace of change means that both opportunities and risks will evolve rapidly, requiring adaptability and vigilance from all of us.
50. I have highlighted how MAS is approaching these waves of technology through ISP—facilitating Innovation, enhancing our Supervisory capabilities, and working in Partnership with the industry.
51. But let me be clear: we cannot navigate this transformation alone. The future of our capital markets depends on continued collaboration between regulators, market participants, and technology providers. Forums like this FIA Asia Derivatives Conference are invaluable in fostering the dialogue and partnerships we need.
52. As we move forward, let us remain committed to our shared goal: building capital markets that are not only innovative and efficient, but also fair, transparent, and resilient — markets that serve the real economy and inspire confidence among investors and consumers alike.
53. Thank you, and I wish everyone a productive and insightful conference.
*****
[1] Futures Industry Association (2025)
[2] Coinbase and Ernst & Young-Parthenon (2025), "2025 Institutional Investor Digital Assets Survey"
[3] Futures Industry Association (2025), "Accelerating the velocity of collateral"
[4] Bank of International Settlements (2025), “The rise of tokenised money market funds”
[5] CFA Institute (2025), “Tokenized Money Market Funds Emerge, Piloted by Industry Big Whigs”
[6] McKinsey & Company (2024), "From ripples to waves: The transformational power of tokenising assets"
[7] Boston Consulting Group and Ripple (2025), “Approaching the Tokenisation Tipping Point”
[8] World Economic Forum and Accenture (2025), "Artificial Intelligence in Financial Services – White Paper, January 2025"
