On January 1, 1995, the World Trade Organization (WTO) was established to continue and further the framework of the General Agreement on Tariffs and Trade (GATT). The scope of the WTO expanded to include trade in services, including financial and telecommunications services, intellectual property rights, dispute settlement between member nations, and those nations' trading policies, in addition to trade in goods which had been discussed under GATT. This volume analyzes the course of developments that led to the establishment of the WTO, the organization's framework, the position the WTO gives to the General Agreement on Trade in Services (GATS), and the impact of GATS on the investment banking industry.

In 1995, Microsoft Corporation brought Windows 95 to the PC market, as a successor to its earlier operating system (OS) Windows 3.1. The release of Windows 95 in turn produced explosive growth in the number of Internet users worldwide. In international finance, a dramatic paradigm shift began in response to the global trend toward the formation of information system networks. This paradigm shift went on to change the "risk awareness" at the foundation of the financial business. In this volume, we consider one incident that took place in Singapore, a key player in the Asian financial market, the downfall of a traditional international financial institution that accompanied this incident, and increased interest in operational risk.

The Tokyo market improved its position by one place to ninth in the Global Financial Centres Index published in March 2008, up from 10th in the same index released in September 2007. However, Tokyo still lags far behind Hong Kong in third and Singapore in fourth place. The attitude that is central to this series is encapsulated by the question, "What can Tokyo do to recover its position as an international financial market?" As a reference for drafting a policy in answer to this question, in this volume we analyze the national strategies of Singapore, the country which the Swiss-American investment bank introduced in the previous report chose as its intra-group offshoring center around 1995.

The paradigm shift in international finance gathered momentum around 1995. In this period, the back offices of multinational investment banks "built" the mechanism of operational processes outsourcing to other companies in the same countries, the business models for intra-group offshoring in which other overseas offices are expanded and transformed into centers for developing information systems for large-scale business processes, and schemes for offshore outsourcing of information systems development to other companies in different countries. In this volume, we explore key points in intra-group offshoring by analyzing a case involving the global information systems strategies of a multinational investment bank.

In this volume, we look at the characteristics of the "construction period" from 1995-1999, which followed the "initial period" from 1970-1989 and the "dawn period" from 1990-1994. One economist singled out 1995 as the year in which the mechanism of contemporary capitalism began to change dramatically as a result of the IT revolution and globalization. Likewise, in this series, I consider 1995 to be the year in which a dramatic paradigm shift got underway, in the direction of global information system management in the investment banking industry. This paradigm shift took different courses in Japan, the United States, and Europe. With this in mind, in this series we look at the financial and telecommunications deregulation in the U.S. that drove the paradigm shift, as well as changes that took place in Japanese financial administration and financial institutions over the same period.

What is the essence of the changes that contemporary society confronts? British historian Dr. Arnold Toynbee offered a straightforward answer: the "disappearance of distance." The emergence of the information society dates back to 1990. U.S. futurologist Alvin Toffler called the information revolution the third wave, after the first wave, the agricultural revolution, and the second wave, the industrial revolution. Offshoring and outsourcing of cost centers are seen as one of the most important management strategies in the investment banking industry today. This phenomenon can be interpreted as an event that symbolizes the disappearance of distance in a flow of business processes that resulted from the information revolution.

Starting 1993, policy messages on finance and information technology (IT) from the Clinton administration were disseminated not only across the United States but the whole world. Responding to the globalization of this new business model, investment banks began actively investing in the development of cross-border information networks, resulting in the rapid transformation of intermodal information exchange methods, from more traditional technologies like fax and telex to newer technologies utilizing computer networks. Methods for managing information systems have also started to change as a means of dealing with global business needs.

Back offices of investment banks have traditionally been run at a high cost, a reflection of intricate and complex information systems and an inefficient paperwork process involving many different carbon copy paper slips. Correcting this requires devising and executing a plan for new information systems strategies. Bolstering the stability of information systems requires a shift from end-user computing with a personal computer environment in user sections to systems development led by IT sections and using a Unix environment. To ensure the success of IT projects, some players began developing hybrid managers.

When investment banks enter new financial markets, they need to develop business processes and information systems that comply with local laws and regulations. The Western investment banks that entered the Japanese financial markets in the late-1980s were able to generate profits by applying the trading techniques they had developed in European and U.S. markets to the Japanese bond market, but they found the Japanese stock market an altogether more difficult proposition. This report considers the roots of the high operating costs in Japanese financial markets that troubled Western investment banks during the dawn period of offshoring and outsourcing from 1990-1994.

In Volume 2 of this series, I focused on the pre-dawn period of offshoring and outsourcing from 1970 to 1989 and identified that European and U.S. investment banks faced the question of how to operate back-office processing in their organizations in an environment of expanding international financial transactions. In this section, I discuss the dawn of offshoring and outsourcing from 1990 to 1994. The discussion takes three perspectives: movements in international politics and the global economy, investment banking business, and back-office processing system.

In the process of developing information system strategies, offshoring and outsourcing of cost centers has now become an issue that cannot be ignored in the investment banking industry. With this in mind, this paper will analyze through what kind of processes the structure of offshoring and outsourcing has developed in the investment banking industry from three perspectives: the evolution of international political economy, changes in the investment banking business, and the advancement of computers.

In the mid-1990s, the concept of the information superhighway was introduced in the United States under the leadership of then Vice President Al Gore, who played a significant role behind the scenes of the Clinton administration. Gore's interests and concerns have since shifted from information to the environment, and he is currently involved in a worldwide campaign designed to educate people on global warming through means such as his documentary movie An Inconvenient Truth, which was a major box office hit last year and which helped earn him the 2007 Nobel Peace Prize. In the meantime, the information superhighway vision espoused by Mr. Gore about a decade ago is now having an enormous impact on international financial systems.