The Monetary Authority of Singapore (MAS) has announced a more detailed set of measures — following its initial statement dated Feb 13 — listing the first set of proposed measures by the equities market review group.
On Feb 21, the central bank said its measures fall under three main pillars: demand, which is to grow investor interest; supply, which is to attract quality listings; and regulatory moves to strengthen investor confidence.
“We are not relying on one or two measures, but we are taking a more comprehensive approach to address some fundamental questions and to strengthen our competitiveness,” says Second Finance Minister Chee Hong Tat.
Under the demand pillar, MAS set out four measures to increase liquidity and fortify capabilities in the local fund management and equity research ecosystem.
First, MAS and the financial sector development fund (FSDF) will launch a $5 billion equity market development programme (EQDP). The programme will see MAS investing with selected fund managers to implement investment mandates that have a “strong focus” on Singapore stocks.
According to the central bank, the strategies should be actively managed. The fund managers should also invest in a range of companies and not just in component stocks within the Straits Times Index.
See also: MAS Review Group’s proposals may boost short-term returns, but will it be sustainable?
MAS says it will start evaluating fund managers and strategies over the next few months.
Next, MAS intends to exempt the tax on fund managers’ qualifying income that is derived from funds that are investing substantially in Singapore-listed equities. “This complements the EQDP and serves to support fund managers in launching and actively distributing funds that invest substantially in Singapore’s equities market,” reads the central bank’s Feb 21 statement.
Third, MAS says the Economic Development Board (EDB) will adjust the global investor programme (GIP) where GIP applicants investing under the family office option will now have to deploy at least $50 million into equities listed on approved Singapore exchanges. This will replace the previous qualifying investment categories, which comprised listed equities, REITs, business trusts, qualifying debt securities, Singapore-distributed funds and non-listed Singapore-based operating companies.
See also: STI gives up day’s gains to close 0.06% lower on Feb 24
Under the GIP, these applicants have to establish a single family office (SFO) with assets under management of at least $200 million.
Finally, MAS will expand the research development grant scheme under its grant for equity market Singapore (GEMS) programme to build a “ready investor base”. The expanded programme also intends to sharpen focus on mid- and small-cap enterprises, as well as increase research dissemination including via new media channels.
MAS and the Singapore Exchange (SGX) will release further details around mid-2025.
On the supply side, MAS listed three measures in a bid to attract quality companies to list on the SGX. The measures also aim to entice fund managers to tap Singapore’s equities market for their capital raising.
First, a 20% corporate income tax rebate has been proposed for new companies seeking primary listings. A tax rebate of 10% has been proposed for new secondary listings with share issuance. The following rebate caps are are available, which are: $6 million per year of assessment (YA) for qualifying entities with a market capitalisation of over $1 billion or $3 million per YA for qualifying entities with a market capitalisation of less than $1 billion.
The proposed rebates are supposed to complement the existing GEMS listing grant scheme, which provides 70% co-funding of eligible listing expenses for companies seeking to list on SGX's Mainboard. The scheme also provides 20% co-funding for eligible Catalist-listing expenses.
Next, MAS has proposed an enhanced concessionary tax rate of 5% on qualifying income for new fund manager listings in Singapore. Eligible fund managers have to distribute a portion of its profits as dividends to qualify.
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Third, MAS says the government will continue to enhance support to develop local enterprises in a bid to provide a pipeline of potential companies for listing. These include the new investment schemes announced in this year’s Budget and will be administered by the Ministry of Trade and Industry (MTI) and Enterprise Singapore.
Regulatory measures
The final group of measures involve regulatory changes. These regulatory proposals involve changes to the statutory requirements and SGX’s listing rules, and will go through a public consultation process.
Singapore Exchange Regulation (SGX RegCo) and MAS will issue “detailed” consultations on these proposals by mid-2025. They will review the feedback before implementing the finalised set of measures.
The review group has proposed to consolidate listing suitability and prospectus disclosures review functions in SGX RegCo. This will provide prospective issuers with greater clarity on the listing process and timeline, as they only need to engage with one regulator going forward.
The review group has also proposed to reduce the scope for “merit-based judgment” when admitting new listings by streamlining SGX RegCo’s qualitative admission criteria. “Instead of taking a prescriptive approach to how issuers mitigate any risks prior to listing, RegCo will focus on ensuring that the disclosure of material issues is sufficient for informed decision-making by investors,” says MAS.
In addition, the review group has proposed to streamline prospectus requirements and listing processes. All major parts of the prospectus requirements — including financial information, interested person transactions and conflicts of interest — will be streamlined “while continuing to adhere to international standards”, says MAS.
“Core disclosure requirements will be retained, with emphasis on clear disclosure of the most relevant and material information to investors,” says MAS. With the streamlining, issuers can expect a typical listing review process to take six to eight weeks.
MAS will also simplify requirements to allow issuers seeking secondary listings in Singapore to do so using the prospectus from their primary listings with “minimal adaptations”.
Finally, the central bank says that SGX RegCo will adopt a “more targeted approach” to post-listing queries, alerts and trading suspensions.
“As public queries and alerts can have unintended and disruptive effects on the trading of issuers’ shares, a more targeted approach to such interventions will allow SGX RegCo to strike a better balance in facilitating market discipline and achieving investor protection,” says MAS.
SGX RegCo will also consult on a proposal to remove the financial “watch-list”.
Reactions
SGX is "supportive" of the measures proposed by the review group, says the exchange's CEO Loh Boon Chye.
“This is a milestone for the ecosystem and a significant step towards strengthening the competitiveness of Singapore’s equities market. The initiatives announced thus far will jumpstart more capital into the capital markets ecosystem and stimulate interest in local stocks and listings," he adds.
On the three pillars, Loh acknowledged that the regulatory improvements will "support both demand and supply-side measures" while market discipline will "play a bigger role going forward".
"We will work closely with MAS to prepare for these changes and recognise that sustained collaboration, concerted efforts and speedy implementation of the measures are essential to navigate evolving market dynamics. We are greatly encouraged by the partnership between the private and public sectors to enhance Singapore’s value proposition as a strong capital-raising venue for enterprises in this region," he continues.
Temasek Holdings' CEO Dilhan Pillay, noting his participation in the Singapore securities market for over 30 years, said that the measures and proposals by the review group "represents the most significant changes that we will be making to the Singapore securities markets since the reforms of the late 1990s to the early 2000s, culminating in the Securities and Futures Act 2001 and the move to a disclosure-based regime".
"The changes will need to be phased in given that the review will need to balance a forward looking approach with the requisite investor protection. The key is to remain a trusted jurisdiction for all participants in the Singapore securities markets," Pillay adds.
Carol Fong, group CEO of CGS International applauded the measures, saying they have "certainly exceeded many of our expectations" considering a "comparatively lacklustre teaser of the tax incentives" that were first announced at the Budget.
She also hailed the "progressive and forward looking" $5 billion scheme as well as the new framework, which is likely to improve certainty and bring about a faster time to market.
"The moves to a disclosure-based regime are less prescriptive but still provides regulatory oversight. By streamlining the approval process under one regulator, it shortens the time to market to six to eight weeks for new listings and improves certainty of listings," she adds.
"What is important is that you also sense a real shift in risk appetite to rely more on risk-based disclosures and attitude towards regulatory certainty. These are definitely steps in the right direction but there is still more that can be done, and I am sure that more announcements will be made shortly on other measures that can further improve the system," Fong concludes.
Read more about the equities market review group:
- Review group's measures can help 'break the inertia' of IPOs vs liquidity, says Clifford Lee of DBS (Feb 23)
- Equities market review group targeting ‘mid-sized but good-sized’ companies to list in Singapore (Feb 23)
- New family offices may contribute $15 billion to local bourse this year, suggests Maybank's Wickramasinghe (Feb 23)
- Proposing equity market changes a ‘balancing act’ that comes with ‘trade-offs’: Chee Hong Tat (Feb 22)
- 'This has definitely made my Friday': Azure's Wong (Feb 22)
- Plenty of overseas liquidity to be tapped amid plan to nudge family office money into local equities: Lang (Feb 21)
- ‘Unaddressed elephant in the room’: Reservations about MAS equities market review group’s proposals (Feb 17)
- SGX shares close 5.8% lower after MAS equities market review group’s first proposal (Feb 14)
- MAS’s equities market review group proposes tax incentives as part of measures to boost Singapore’s bourse (Feb 13)
- Revitalising SGX: Beyond liquidity injections (Feb 6)
- ‘Not practical’ to rely on sovereign wealth to support, sustain Singapore equities: Gan Kim Yong (Jan 2)
- SGX Group chairman calls for ‘bold and decisive actions’ to solve stock market’s ‘longstanding issues’ (Jan 2)
- Making the Singapore market great again (October 2024)
- Revitalising Singapore equities market ‘not an easy task’, says Chee Hong Tat (September 2024)
- MAS’s equities market review group holds first meeting, unveils 31 workstream members (August 2024)
- MAS launches review group to strengthen equities market; recommendations to come within a year (August 2024)
