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CNA
18-05-2025
- Business
- CNA
Commentary: After years of playing sheriff, SGX wants to let the market breathe
SINGAPORE: In a nod to the increasing diversity and complexity of the stock market and investors, the Singapore Exchange Regulation (SGX RegCo) has proposed shifting its regulatory stance towards a more proactive disclosure-based regime. SGX RegCo said the new regime - which it is presenting for a month-long public consultation - will focus on 'the materiality of information that needs to be disclosed in a timely and accurate manner'. In doing so, the new approach emphasises a pro-enterprise bias and gives investors information to make their own decisions. In short, the move away from the current prescriptive model of disclosure brings forth the principle of caveat emptor or 'buyer beware' for investors. As SGX RegCo put it, the market can better discriminate in favour of companies with high standards of corporate governance and disclosure. 'The effectiveness of such a market-driven approach rests on a foundation of rules and standards that assure market participants that the information on which they base their decisions is accurate and accessible, and that the market is fair,' said CEO Tan Boon Gin in a statement on Thursday (May 15). This is big. A NEW REGULATORY ERA Ever since the S$8 billion penny stock crash in 2013, regulators have taken a hard line on market malfeasance - both real and perceived. In the weeks leading up to October 2013, Malaysian businessman John Soh Chee Wen and his associates engaged in one of the largest stock manipulations on the Singapore bourse, centred on three stocks: Blumont Group, Asiasons Capital and LionGold Corp. Responding to this, SGX RegCo has taken a very top-down prescriptive approach to market monitoring over the past 12 years, jumping in not just when management, directors or owners strayed from the rules, but even when there were perceived unusual stock price movements. All this has had a chilling effect on the market and effectively killed the 'animal spirits' which is critical to maintain healthy speculative interest which is often the lifeblood of trading activity. As a result, the Singapore market has remained the most moribund in the region as liquidity dried up, price discovery evaporated, valuations hit the floor and new listings disappeared. Meanwhile, delistings have become common. So could the proposed measures announced on Thursday evening change all this? It is too early to say. That said, it is a step in the right direction to rejuvenate this market. But much more needs to be done. THE TOWN SHERIFF While the proposals include a gamut of initiatives, including changes in qualitative and quantitative listing criteria, the most effective initiatives could be the scrapping of the financial 'Watch-List' and the adoption of a more targeted approach in post-listing queries. The much-disliked Watch-List - a 'penitentiary' for companies with multi-year losses and falling market capitalisation - effectively sidelined these corporations. In the process, it killed business confidence and made it near impossible for these companies to raise capital. Meanwhile, the severe and open-ended SGX RegCo queries - often about perceived unusual stock price movements - caused nervousness and alarm in the broader market. Some have likened this approach to a town sheriff in a spaghetti Western who charges into a saloon, guns drawn, causing panic-stricken patrons to dive for cover, when in fact there is only one crook slinking in the far corner of the bar. So how will all this impact the Singapore bourse? In reality, SGX RegCo's proposals dovetail with one of the recommendations announced by the Monetary Authority of Singapore's (MAS) Equities Market Review Group in February. In particular, it plays to the S$5 billion Equity Market Development Programme unveiled by the review group. This scheme envisages fund managers and accredited institutional investors deploying this money into small- and mid-caps which are not on any index. The same fund managers are then expected to monitor the companies into which they invest. In short, some aspects of the market oversight and protection will now move to the realm of the investor, although SGX RegCo will retain backstop surveillance and enforcement functions. WHAT ABOUT INVESTOR PROTECTION? As SGX RegCo put it in its announcement, these adjustments will strike a more 'proportionate balance in facilitating market discipline and achieving investor protection'. While the institutional and accredited investor will indeed be able to handle and monitor the market-based disclosure regime, what about the retail investors? What about the less sophisticated moms-and-pops who have sunk their hard-earned retirement savings into stocks and shares? Their interest will be protected not just by the sophisticated institutional investors, but also SGX RegCo, whose surveillance and enforcement functions remain unchanged. But rather than regularly intervening in the market and creating unnecessary 'noise', it is envisaged that SGX RegCo will take a more targeted approach when it detects irregularities or serious breaches. The interests of the retail investors can also be protected by the Securities Investors Association (Singapore). Since its establishment some two decades ago, SIAS has done a pretty good job as an advocate for retail investors. But there are also other measures in place to protect small investors, such as changes to the Securities and Futures Act in 2017 which saw the strengthening of the governance and enforcement powers of MAS to safeguard the interest of retail investors. If one were to stand back and take an objective look at the initiatives proposed (which are still subject to tweaks) from a risk-reward perspective, the positives outweigh the negatives. This market needs to rekindle the animal spirits. The chilling effect of constant and heavy-handed SGX RegCo queries simply does not allow for this. If implemented, these measures will reduce regulatory friction that impedes price discovery and market efficiency. There will be players who will try to game the system, but the risk of malfeasance of the John Soh variety is small. Much has been learnt and measures have been put in place over the past decade. While the latest proposals may not be perfect in everyone's eyes, they do go some way towards bringing the disclosure regime more in line with more sophisticated markets like New York, London, Tokyo and Hong Kong. One only needs to look back at Tokyo over the past decade, where increased institutional participation coupled with a disclosure-based regime revitalised the market. Hopefully, this will be replicated in Singapore. Taken together with other incentives and liquidity boosting measures still being rolled out by the Review Group, SGX RegCo's proposed light-touch market-driven disclosure regime - which gives investors information to make their own decisions - could be a key catalyst for the revitalisation of the Singapore Exchange.
Straits Times
15-05-2025
- Business
- Straits Times
SGX RegCo proposes removing financial watchlist, avoiding public queries on listed firms
SINGAPORE – The watch-list of loss-making Mainboard companies could be scrapped, while public queries to firms displaying unusual trading activity may be avoided in favour of private engagement. These are among proposed amendments to Singapore Exchange (SGX) listing rules aimed at reducing regulatory friction and encouraging better price discovery and overall market efficiency. The proposed changes are expected to strike a more proportionate balance in facilitating market discipline and achieving investor protection, noted the Singapore Exchange Regulation (SGX RegCo) on May 15. The regulator is consulting the public on removing the financial watch-list after feedback that it has unintended negative effects on business confidence and access to financing. SGX RegCo adds a Mainboard-listed issuer on the watch-list if it has pre-tax losses for three consecutive years and an average daily market capitalisation below $40 million over the preceding six months. The proposed changes will see the list removed, although issuers will still have to announce if they incur losses for three straight years. SGX RegCo will also suspend half-yearly reviews for adding companies to the watch-list, and affected issuers will remain listed regardless of whether they meet exit criteria. The proposed changes are part of a shift towards a less prescriptive and more disclosure-based system for companies that want to list in Singapore. They come after a review group announced new measures in February aimed at reviving trading on the SGX. Alongside the proposed listing rule changes, SGX RegCo also plans to take a more targeted approach when querying firms on unusual trading activity. This reflects market concerns that issuing public queries without regard to materiality can unnecessarily alarm investors. Instead, it plans to shift its approach to privately engaging a company when unusual trading is detected. The regulator also proposes to limit the validity period of trade-with-caution alerts to an initial period of two weeks, implying that the alert will only be active for that timeframe. These alerts signal that there is unusual or potentially concerning trading activity in a particular stock, and serve as a warning to investors to be mindful of potential risks. However, these alerts can stay up indefinitely even after the issue has passed. By limiting them to two weeks, the SGX can reduce market uncertainty and prevent unnecessary long-term impact on a company's trading activity. SGX Rego also wants to refine its approach to the suspension of issuers, although it did not elaborate. More than 40 listed companies were suspended from trading as at March 31, 2024, noted an SGX report. The report also showed that the nine companies seeking share trading resumptions have been suspended for an average of 3.2 years. SGX Regco chief executive Tan Boon Gin noted that 'the effectiveness of such a market-driven approach rests on a foundation of rules and standards that assure market participants that the information on which they base their decisions is accurate and accessible, and that the market is fair'. He added that the SGX RegCo will continue to 'ensure that regulatory oversight of both corporate disclosures and trading activity remains rigorous, even as we refine the manner in which such oversight is conducted and communicated, to ensure relevant and material information for investors is disclosed'. The regulator's practices for other market surveillance activities will remain unchanged. Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
15-05-2025
- Business
- Business Times
SGX RegCo consults on regulatory changes to streamline IPO rules
[SINGAPORE] Listed issuers on the Singapore Exchange (SGX) will be expected to take on a more proactive role in providing timely and relevant disclosures, focusing on material information rather than following prescriptive requirements. The change comes as the Singapore Exchange Regulation (SGX RegCo) seeks market feedback on the proposed regulatory changes aimed at transitioning to a more disclosure-based regime, it announced on Thursday (May 15). These changes include streamlining qualitative mainboard admission criteria, refining quantitative mainboard admission criteria, removing the financial watch list, as well as revising post-listing queries and obligations. It said the proposed changes are in line with an approach that 'adopts a pro-enterprise stance alongside measures to strengthen investor confidence'. These reforms are part of recommendations to revive the local market, which were announced by the Monetary Authority of Singapore (MAS) equities market review group in February 2025. The changes are expected to complement other measures announced by the group to promote institutional participation, and foster an attractive and trusted market. These include the S$5 billion Equity Market Development Programme and tax incentives to encourage greater investment in Singapore-listed equities. The group also recommended adopting a more 'pro-enterprise regulatory stance' with regulatory measures moving Singapore towards a more disclosure-based regime. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'This will smoothen the path for enterprises to access the capital markets, allowing investors an expanded range of investing opportunities and better ability to make investment decisions in reliance on relevant and material information,' said Tan Boon Gin, chief executive officer at SGX RegCo. The aim is to assure market participants that the information on which they base their decisions is accurate and accessible as well as maintaining a fair market. 'To that end, we will ensure that regulatory oversight of both corporate disclosures and trading activity remains rigorous, even as we refine the manner in which such oversight is conducted and communicated, to ensure relevant and material information for investors is disclosed,' he added. Streamlining admission criteria for mainboard listings The proposed changes will also include streamlining the qualitative admission criteria for mainboard listings. SGX RegCo intends to maintain a prescriptive approach in critical areas such as an applicant's financial position and the track record of its directors, management and controlling shareholders. For other matters, the emphasis would be on ensuring companies provide relevant and robust disclosures to support informed investor decisions, rather than mandating how such matters should be resolved. Market participants told The Business Times that the moves could boost SGX's appeal as a listing destination, but cautioned that such a shift must be accompanied by robust investor safeguards, corporate governance and investor education. 'Traditional, prescriptive metrics often make it difficult for such companies to list – one reason we see so few tech firms on our exchange,' said Terence Wong, CEO at Singapore-based fund manager Azure Capital. He also stressed that investor education becomes even more critical in this new environment, as investors need to learn how to extract key insights from increasingly detailed disclosures. Luke Lim, managing director at brokerage Phillip Securities and chairman of Securities Association of Singapore, said: 'This approach recognises that today's capital markets are more diverse, dynamic and investor-led than ever before. Instead of prescribing what companies should or should not do, disclose with clear, relevant, and timely disclosures – and then let the markets decide.' Lock Yin Mei, managing director of Venture Law, noted that a merit-based assessment of qualitative criteria, such as conflicts of interest, represents only a snapshot at a specific moment. She said that as facts and contexts evolve, a prescriptive approach may not always be appropriate for every issuer. 'The alternative of disclosure and explanation, makes the issue public and places the responsibility with the issuer and professionals, for which under the proposals, they can be taken to task,' she added. Balancing regulatory oversight and market empowerment To support good companies, SGX RegCo is also proposing to remove the financial watch list, citing concerns over its unintended impact on business confidence and financing. The regulator said companies will still be required to announce if they report losses for three consecutive years. In the meantime, its half-yearly reviews related to placing companies on the watch list will be suspended. However, companies already on the list will remain listed during this period, regardless of whether they meet the exit criteria. In addition to the proposed listing rule changes, SGX RegCo also plans to refine its approach to post-listing queries and obligations. The regulator noted that issuing public queries for immaterial matters could create unnecessary alarm in the market. It is therefore proposing a more calibrated approach, including shifting to private engagement in certain cases, narrowing public disclosures to price-sensitive or trade-sensitive information, limiting the validity of trade-with-caution alerts to two weeks, and updating its suspension framework. All feedback is to be submitted by Jun 14.
Yahoo
25-02-2025
- Business
- Yahoo
Singapore's ISCA and SGX RegCo launch workshops
The Institute of Singapore Chartered Accountants (ISCA) and the Singapore Exchange Regulation (SGX RegCo) have announced a collaborative initiative to launch training workshops aimed at enhancing sustainability reporting among Singapore-listed companies. These workshops will provide an understanding of the International Sustainability Disclosure Standards (ISSB) and support companies in meeting mandatory climate-related disclosure requirements. This comes following the Singapore government's early 2024 announcement of mandatory climate-related disclosures. The workshops will assist companies in transitioning from other internationally recognised standards to the ISSB standards. The training will focus on the differences between the Global Reporting Initiative (GRI) and ISSB standards, with practical exercises to equip companies with the necessary skills. ISCA president Teo Ser Luck said: 'Our partnership with SGX RegCo highlights the importance of continuous learning in maintaining strong accountability and transparency in Singapore's capital markets. 'This training programme reflects our commitment to equipping businesses with the knowledge they need to adapt to changing regulatory demands.' Eight sessions are scheduled from April to September 2025, with the first session taking place on 17 April 2025. Topics covered will include Singapore's climate reporting and assurance roadmap, the differences between GRI and ISSB standards, and how to perform climate-related disclosures as per IFRS S2 requirements through practical exercises and case studies. This initiative builds on previous efforts by ISCA, including the October 2024 launch of a sustainability report based on GRI and IFRS Sustainability Disclosure Standards. SGX RegCo CEO Tan Boon Gin said: 'SGX RegCo is committed to supporting listed companies in adopting the IFRS Sustainability Disclosure Standards. Customers are becoming more discerning about the sustainability credentials of the products and services they consume. 'This in turn will increasingly drive companies to align themselves with the latest standards. Training such as these workshops with ISCA will help companies to meet customer expectations by building up their reporting capabilities.' SGX RegCo is set to partially sponsor the workshop fees for up to 400 attendees. Additionally, ISCA has allocated up to S$6m ($4.5m) for the Polytechnic Pathway Programme, which supports local polytechnic graduates in obtaining the Singapore Chartered Accountant Qualification. "Singapore's ISCA and SGX RegCo launch workshops" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
