Along with the rapidly burgeoning Asian economy, the financial markets in the region have seen spectacular development during the past few decades. Several recent statistics will best illustrate their success. Net capital flows to Asia and Pacific over 1999 to 2003 constituted 40% of total flows to emerging markets and about 13.9% of the world's FDI flows. Over 90% of net capital flows to the Asia Pacific region has been in the form of equity and portfolio investment. By the end of 2004, Asia's share (including Japan) in world equity market capitalization has grown to 21%, with a total market value of over 7.89 trillion. The number of listed companies has also more than doubled from 7632 in 1995 to 17,583 in 2004. More importantly, the strong growth momentum shows no sign of abating. While these achievements are encouraging, the accompanying problems should by no means be overlooked. For example, the devastating Asian financial crisis in 1997, which spanned across the entire region, is testimony to the vulnerability of financial markets. Although most of the affected markets have since recovered from the shock and are now back on track to achieving new market highs, the lessons learned from the crisis highlight the importance for a strong market architecture, such as having a well designed trading system and effective regulation of securities trading, for efficient information flows, rapid price discovery, and lower transaction costs, among others. In this Special Issue, many of these issues are examined within a market microstructure framework in selected Asian Pacific financial markets.