Implementing “pro-enterprise” changes proposed by the Monetary Authority of Singapore’s (MAS) equities market review group will come with “trade-offs”, says Second Finance Minister Chee Hong Tat, but parties involved will work to make the Singapore market more attractive while strengthening investor protection and confidence.
Speaking at a Feb 21 media briefing on the review group’s first tranche of proposed measures, Chee says a shift towards a more “disclosure-based regime” does not mean regulators will “relax or let go of high standards and investor protection”.
“I think the two are not mutually exclusive, and they can be achieved together if we design it well,” says Chee, who is also MAS deputy chairman and chair of the seven-month-old review group.
In his opening remarks, Chee says past cases of corporate failures and market misconduct on the Singapore Exchange (SGX) have “dented” investor confidence, and “layers of rules were added” to protect retail investors. This, however, has increased compliance costs, while giving market participants “a false sense of security”, he adds.
“In the extreme case, you have cases where people just provide a lot of information [and] submit a lot of documents, but it doesn’t mean that investors would have greater clarity on the risk,” says Chee in response to media queries.
“So, I think what we need to do is to look at how we can, on one hand, reduce the compliance costs [and] speed up the process, so that we encourage more companies to consider listing [on the] SGX, but at the same time, see what we are able to do to strengthen the safeguards to protect investors and to be able to maintain high corporate governance standards. I believe there’s a way to be able to achieve both objectives,” he adds.
See also: MAS Review Group’s proposals may boost short-term returns, but will it be sustainable?
Proposed removal of ‘watch-list’
The first set of proposed measures unveiled on Feb 21 are targeted at three areas — supply-side measures are aimed at improving Singapore’s attractiveness to quality listings; demand-side measures are aimed at increasing investor interest and liquidity; and regulatory measures outline a shift towards a more disclosure-based listing regime while strengthening investor confidence.
Among the latter group is a proposed change to the queries, alerts and trading suspensions that listed issuers may face.
See also: STI gives up day’s gains to close 0.06% lower on Feb 24
According to MAS, these public queries and alerts can have “unintended and disruptive effects” on the trading of issuers’ shares, and “a more targeted approach” to such interventions will allow SGX RegCo to “strike a better balance” in facilitating market discipline and protecting investors.
In addition, SGX RegCo will also consult on a proposal to remove the financial “watch-list”.
SGX introduced the watch-list for Mainboard-listed companies in March 2008. According to SGX’s website, an issuer may be placed on the watch-list “as part of ongoing efforts to improve the overall quality of listed companies in Singapore, and promote investor confidence”.
An issuer will be placed on the watch-list if it records pre-tax losses for the three most recently completed consecutive financial years (based on audited full-year consolidated accounts) and an average daily market capitalisation of less than $40 million over the past six months.
These regulatory proposals involve changes to the statutory requirements and SGX’s listing rules, and will go through a public consultation process. MAS and SGX RegCo will issue “detailed” consultations on these proposals by mid-2025. The two parties will review the feedback from the public consultation before implementing the final set of measures.
Chee says the review group is “not making any sudden changes” to the current regulatory regime. “We will do so in close consultation with the industry before we make any changes. So, there’s a process for that before those changes are introduced. But today, what we are signalling is our intent and the direction we want to take.”
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Second set of measures to come
Along with this initial set of proposed measures, MAS revealed some other measures that are being studied. These include a review of the Catalist board and ways to enhance avenues for investors to seek recourse and compensation for losses suffered due to market misconduct.
These next set of measures could be proposed soon; Chee says the review group aims to “complete this second tranche of measures by [the] end of this year”.
In response to queries by The Edge Singapore, Chee says the review group “need[s] a bit more time to work out” measures in the second tranche. “We are still in discussion with stakeholders to better understand the concerns and how to strike this balance between keeping the spirit of innovation and enterprise, and allowing different groups of investors with different risk appetites to decide for themselves how they want to invest, versus putting in place sufficient protection for investors, especially retail investors.”
Chee adds: “This is something which we will continue to review, and it’s a balancing act, in some sense, because there are trade-offs… The goal that we are trying to work towards will be to achieve both [a] pro-enterprise regime and to strengthen investor protection and confidence.”
Photos: Albert Chua/The Edge Singapore
Read more about the equities market review group:
- 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)
- Review group measures to help bring US-listed 'orphans' back home: Neil Parekh (Feb 22)
- 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)
- MAS and Financial Sector Development Fund to launch $5 bil programme, adjust GIP to revive Singapore’s equities market (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)
