TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
Comments
R Sivanithy
19 February 2014
There have been many attempts to stimulate retail interest in the stock market over the past few years, but the results have not been encouraging. Brokers and the Singapore Exchange (SGX) regularly conduct educational seminars, the exchange’s website is a useful source of instructional information and commissions are now razor-thin, yet volume today is poor, phones are not ringing and many brokers are seriously contemplating throwing in the towel.
As one remisier noted, why stay in stock broking and service retail clients for 40 per cent of 0.2 per cent of business done, when real estate brokers can earn 1-2 per cent? Why indeed. As we have noted many times before, the only way to change this is to address the concerns of the retail segment, both the punters who trade regularly and the frontline staff who actually bring in the business and service the retail investing public. Listening to what they have to say may prove useful.
According to these parties, a great deal of the reluctance to trade today originates from last October’s penny stock crash. The handling of that sorry episode was undoubtedly poor and hardly inspired confidence, with patchy and incomplete information from regulators compounding the fear and panic that surrounded that collapse. This, according to unanimous feedback, has significantly dented confidence in the system and is keeping retail punters away.
“Clients are worried that the authorities will clamp down very hard on speculative punting and shift the goal posts after the game has started,” said one trading representative (TR), summing up existing fears.
One of the measures proposed post-October is to curb contra trading by shortening the settlement period and to require 5 per cent collateral for all trades. Setting aside the question of whether contra trading really played a significant role in the rise and fall of the penny sector, this proposal would undoubtedly be unpopular among older TRs, retail players and those with clients who rely heavily on contra. However, there is no denying that if implemented, this move would reduce the credit risk which TRs and ultimately their brokerages have to bear, so on balance, it should be seen as a step in the right direction and thus should be accepted in that spirit.
However, to allow some latitude for contra trading without collateral and thus cater to die-hard punters, a suggestion has been made that the 5 per cent requirement should apply only for trades above a certain size, perhaps $50,000. This is worth considering, but it’s possible to take it a step further and instead have a progressive scale where the larger the sum traded, the higher the collateral.
So perhaps for trades under $50,000 no margin need be deposited; for trades say from $50,000-$250,000 the client would have to put up 5 per cent, and for trades above $250,000, 10 per cent collateral would be required. Having such a graduated scale should afford even greater protection for TRs while allowing some scope for speculative punting.
It would offer another advantage - freed from the burden of having to worry about credit risk, TRs would have more scope to service their clients, something which according to anecdotal evidence is badly lacking in today’s market. The better the service retail investors receive, the more likely they would be to trade, but it shouldn’t stop there - as a complementary move, it’s worth considering reinstating the lunch break that was taken away in August 2011.
Although we do not have official numbers, the vast majority of brokers contend that liquidity has not improved after SGX’s switch to continuous all-day trading, which spans the eight hours from 9am to 5pm.
Even if there has been an improvement, is it really all about money? Is there no room at all for the exchange to demonstrate some sympathy for the needs of a community whose job, it has to be said, has grown increasingly restrictive and unattractive?
SGX should seriously explore possible compromises, perhaps closing for lunch when Hong Kong breaks between 12pm and 1pm and extending the trading hours, maybe to 5.30pm. If it did this, it would lose only 30 minutes’ worth of business but gain an incalculable amount of goodwill.
The same goes for our oft-repeated suggestion to address the split in commissions between TRs and their houses. The industry norm is 60-40 in favour of the house; the exchange should encourage a shift towards a more equitable split, such as 60-40 in favour of TRs. After all, TRs are really SGX’s frontline sales proxies, selling the exchange and its offerings to the retail public. Engaging them has to be the way forward.