SMCCA faces hurdle in membership drive

As it looks to boost membership count, association believes some firms afraid to offend SGX


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SMCCA faces hurdle in membership drive

As it looks to boost membership count, association believes some firms afraid to offend SGX

Mindy Tantanmindy
04 November 2014

People have told him that he is brave - to put it mildly - for helming the Small and Middle Capitalisation Companies Association (SMCCA), says Tan Choon Wee, president of the freshly minted association.

Indeed, even as the association is actively looking to beef up its membership count, it is facing some reluctance from companies it says are afraid of offending the Singapore Exchange (SGX).

“The SGX regime that we dealt with in the early days is very different from the SGX of today. The SGX then was far more forthcoming, very responsive, and I would say to a certain extent, pretty fair. But the SGX we have known in the last three to five years has somehow instilled fear into listed companies, especially the small ones,” says Mr Tan.

“In our efforts to try and rope in members, we do get the occasional feedback... there’s concern that if I join you as a member, SGX will jam me. This is all uncalled for. It set us wondering, why do people think like that? I’ve already told members, if we don’t sit together, we all get bullied... The association is here, if you don’t want to be identified, you can remain an anonymous member.”

Being the president of the association, Mr Tan’s matter-of-fact, and some might say, rather brash approach - also comes through in SMCCA’s stance.

Since its official launch in October, the association, which was started to provide a “representative voice” for small and mid-cap listed companies, has provided loud dissent to the SGX’s proposed adoption of a Minimum Trading Price (MTP), arguing that it adds no meaningful value to the capital markets, and reduces liquidity and adds to listing cost.

The other hot button issue for SMCCA is the regulatory regime in Singapore. If the structure of the capital markets here is not addressed today, it will spell calamity for our markets in the near future, says Mr Tan.

“It’s a cancer that is breeding... If, at some point, people come out and take a class action, the whole capital market is gone. Because you have a regulator that has teeth but cannot bite because they (SGX) are subject to challenge in court. They can’t impose fines on me. They are not the government.

“SGX is, to me, no different from other listed companies. Their business model is to run a trading platform. Their business is to regulate their own members.”

Instead, Singapore should consider starting up a securities commission made up of market practitioners. “Not bureaucrats. Not just lawmakers,” says Mr Tan. “Form it within the Monetary Authority of Singapore’s purview. Or under Ministry of Finance. Take the entire issuance and regulation department from SGX and spin it off.” Apart from heading SMCCA, Mr Tan is executive director at Elektromotive Group and also runs his own investment fund.

The association is already looking to run a new survey - part of the reason why they are looking to drum up membership - to spotlight the difficulties faced by member companies in their dealings with SGX. It currently has close to 30 members and is targeting 50 members by the end of this year. “We want to make SGX accountable for whatever they promise because they are now charging us fees... without any apparent improvement in service... There must be some accountability.

“What I’m trying to tell people is please, get out there... SGX has certain limitations within their legislative power and we have a right to fight. People don’t understand that.”

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