The rescue plan: MAS and SGX reforms
The first set of measures, announced on Feb 21, included a $5 billion Equity Market Development Programme (EQDP) for co-investment with asset managers in SGX-listed equities, tax exemptions reducing the effective rate to 13.6% (from 17%) for fund managers investing in local stocks, and revisions to the Global Investor Programme (GIP) mandating $50 million investments in SGX mid-caps by new family offices.
Building on this, the latest proposals on May 15 focus on IPO processes and listing criteria. MAS seeks to streamline prospectus disclosures for primary listings by prioritising “core information that are most relevant and material for investors”, while aligning secondary listing standards with the International Organization of Securities Commissions (IOSCO) framework. The removal of third-party expert confirmation for profit forecasts and legislative changes to enable earlier investor outreach aim to lower compliance costs.
SGX RegCo complements these with plans to reduce the Mainboard profit test threshold from $30 million to $10–12 million, and abolish the financial watchlist for loss-making firms, streamlining admission criteria to focus on financial position and track records while emphasising disclosures, refining suspension approaches, and adopting a disclosure-based regime with private engagement over public queries. While framed as a “pro-enterprise stance” to bolster investor confidence, critics warn that easing standards risks admitting lower-quality issuers, reminiscent of past market failures.
Collectively, these proposals target a range of beneficiaries — fund managers, mid-cap issuers, growth-stage companies, and SGX itself — by enhancing liquidity and lowering entry barriers.
See also: Desmond Lee to leave Singapore Economic Resilience Taskforce; Jeffrey Siow to join
A flawed marketplace: SGX’s structural challenges
To understand the broader implications, imagine the SGX as a supermarket where listed companies are suppliers, investors are shoppers, and SGX serves as both manager and quality inspector, with MAS as the overarching regulator.
Currently, this supermarket suffers from a dual crisis: suppliers are departing (16 delistings as of May 2025), and shoppers are scarce, disillusioned by substandard goods — 40% of listed issuers are loss-making. Corporate shoppers are even rarer, with only a small fraction (less than 12%) of SGX-listed issuers deemed investable by institutional standards.
Rather than enforcing stricter quality controls, MAS and SGX RegCo propose easing supplier entry (lower profit thresholds), offering subsidies (EQDP co-investments), and mandating purchases by select buyers (GIP revisions). Meanwhile, the shift to a disclosure-based regime — where suppliers self-report product flaws in fine print, places the onus on shoppers to detect issues, while scrapping the watchlist — ensures defective goods evade public scrutiny, all under a declared “pro-enterprise” and “lighter-touch enforcement” approach to attract overseas suppliers.
This strategy echoes past historical missteps, notably during the early 2000s when over 150 Chinese firms, known as S-chips, listed on SGX, only for a majority to be suspended or delisted amid fraud and governance scandals involving entities like Celestial Nutrifoods, China Hongxing and one infamous 2009 episode where China Sun Bio-Chem Technology claimed its account books were lost after the truck ferrying them was stolen.
Falling short: Critical gaps in reform efforts
What is conspicuously absent from the MAS Review Group’s agenda is a robust investor protection framework. Unlike consumers safeguarded by the Consumer Protection (Fair Trading) Act (CPFTA), which offers redress through bodies like the Consumers Association of Singapore (CASE), Competition and Consumer Commission of Singapore (CCCS), Singapore Tourism Board (STB) and Financial Industry Disputes Resolution Centre (FIDReC), minority investors lack equivalent recourse. Section 216 of the Companies Act places the burden of proving oppression on investors, with no financial ombudsman or class-action mechanism available.
Second, the “comply or explain” regime, often criticised for enabling superficial explanations of governance lapses, further erodes confidence in enforcement — a concern amplified by SGX RegCo’s status as a wholly-owned SGX subsidiary, compromising true independence and mirroring SMRT’s past challenges in balancing commercial and public service obligations. Suggestions that institutional investors can step in to enforce standards in a disclosure-based regime lack historical support, as seen in the S-chip implosion in the 2000s and the Hyfluxdebacle with no intervention by institutional investors despite years of financial distress. The Catalist board, where sponsors earn fees regardless of company performance, continues to harbour zombie listings, with 57% of firms unprofitable. These precedents underscore a persistent governance deficit that current proposals fail to address.
Third, instead of lowering listing admission standards, admission standards for listed issuers should be raised. Loss-making listed companies for more than three years should be de-listed instead of being transferred to the Catalist board whether they remain as zombie companies. Simply removing the 40% of loss-making SGX-listed companies would immediately improve the overall quality of the Singapore stock market.
Rather than adopting a “pro-enterprise stance” at all costs enabling growth and SME issuers to raise public funds more easily, it is more meaningful to ask whether raising public equity is the right move for a growth company given its relatively young stage of maturity. The issue is not whether any growth or SME issuer is able to list on the SGX Mainboard, but rather the ability to sustain their share price over time.
Many SMEs at a young stage of growth are simply not ready for the challenges of being a listed company, whether from an organisational, management or capital structure perspective. And with only a relatively low profit threshold of $10–12 million, total IPO and ongoing listing costs are a heavy burden for a growth or SME company. The cost of equity is expensive, and in many cases, not appropriate for a young and growing company. Hence, most will fail to sustain their share price over time.
Historical precedence amplifies this concern: Catalist was launched in 2007 to enable fast-growing SMEs to tap public funding. However, 86% of Catalist stocks trade below their day one closing price, 57% are loss-making, and 40% have lost nearly all value. Over the past decade, only nine Catalist companies have advanced to the Mainboard (two have since been suspended or on watchlist). However, 17 Mainboard companies were demoted to the Catalist board over the same period, highlighting the board’s transformation from a growth platform into a repository for underperforming issuers.
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Fourth, liquidity constraints compound these issues. With 95% of trading concentration of trading in stocks above $1 billion in market capitalisation, the limited free float — 80% of listed companies in Singapore have free floats of less than one-third of their shares — stifles market depth, hampering the impact of initiatives like the EQDP. Even massive fund deployment cannot overcome the lack of tradable shares beyond index stocks, a structural barrier to revitalising SGX’s vibrancy.
Hence, rather than allowing issuers with 100% private placement and no public float to list, SGX should be mandating a minimum public free float of about 40 % to 50% in order to improve trading liquidity.
Facing the competition: Regional disparities
Regional comparisons underscore the stakes for Singapore. Hong Kong’s exchange (HKEX), despite political headwinds, benefits from mainland capital flows and a 0% offshore fund tax rate, outpacing Singapore’s 13.6% effective rate even after exemptions. HKEX’s ADTV or average daily trading volume of about $34 billion dwarfs SGX’s $1.2 billion — a disparity of over 28 times that of SGX— fuelling a self-reinforcing cycle of listings and trading activity in Hong Kong, a dynamic SGX struggles to replicate.
On the other hand, Bursa Malaysia exhibits stricter enforcement, historically fining 179 directors a total of RM32.4 million between 2014 and 2020, signalling a firmer regulatory stance than SGX RegCo’s less frequent actions which have been criticised as insufficiently rigorous compared to regional peers contributing to perceptions of weak regulatory oversight in Singapore.
Charting a turnaround: Essential reforms for MAS
As the Review Group nears its mandate’s end, its strategy prioritises issuer incentives over structural reform. While easing listing barriers and injecting liquidity may spur short-term interest, they sidestep the core issue: restoring investor trust.
To secure a lasting revival, MAS must pivot in its final year-end proposals with targeted measures:
Establish an independent enforcement body free from SGX’s commercial interests to ensure rigorous oversight.
Mandate profitability timelines for listed firms, delisting loss-making companies after three years rather than transferring them to Catalist.
Enforce a minimum 40%–50% public free float to counter trading concentration and improve liquidity, rejecting listings with 100% private placement.
Introduce CPFTA-style protections for minority shareholders, including a financial ombudsman and class-action mechanisms to balance the scales.
Moreover, MAS must reassess whether public equity is suitable for growth-stage SMEs, given high listing costs and organisational immaturity at low profit thresholds like $10–12 million. Catalist’s underwhelming track record, where only a fraction advance to Mainboard while many Mainboard firms are demoted, highlights the pitfalls of premature listings.
The group’s pledge to propose further measures by year-end — focusing on shareholder engagement, retail liquidity, and investor protection — offers a glimmer of hope.
Without these reforms, SGX risks remaining a marketplace of empty aisles, where suppliers peddle substandard goods as shoppers seek better venues elsewhere. For a lasting revival of the Singapore equities market, the MAS Review Team must shift from subsidising suppliers to empowering the market’s true end-customer — the investor.
Lee Ooi Keong is a senior accredited director with 30 years of experience in investments, corporate performance and governance. He is also the founder and managing director of Clover Point Consultants, an independent Board and C-suite advisory consultancy
