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 Sivanithysivan
10 December 2014
The Singapore Exchange (SGX) has taken a fair amount of criticism for the way trading has deteriorated over the past year since the penny crash of October 2013, a situation not helped by two high-profile computer glitches in the past five weeks.
Some of the criticism has been justified but some has not; however, instead of indulging in endless debate on how much blame should be directed at the exchange, it is time to recognise that recriminations serve very little purpose other than enabling venting of public frustration. Now that that has been completed, it is time to move on and undertake a coordinated effort to tackle the issues plaguing the market and to formulate ways to take the market forward. Such an effort should involve the participation of all stakeholders, not just SGX.
Others that must participate are the Monetary Authority of Singapore, the overall regulator; the Society of Remisiers of Singapore (SRS), which represents retail trading representatives (TRs); the Securities Investors Association of Singapore (SIAS), which represents retail investors; and the Securities Association of Singapore (SAS), which represents broking firms and other financial institutions.
The starting point? It must be how to properly dismantle the dual-role - the commercially-driven regulator model which many believe is an anachronism that lies at the heart of the market’s and SGX’s problems.
The exchange has struggled against a tide of scepticism for 14 years as a commercial regulator, which is 14 years too long, and it would be fair to say that outside of a small and shrinking minority, finding widespread support for a model that falls apart when competition is introduced would be well-nigh impossible.
As noted several times before in this column and in several letters from expert observers over the years, it doesn’t matter if there are other countries that are still labouring with the conflicts inherent in a profit-driven regulatory model, what matters is whether it is right for the Singapore market. In our view, it is not.
It is instead an unwieldy arrangement that severely dilutes SGX’s credibility as a regulator and opens it to constant criticism from brokers and the investing public, forcing the exchange all too often on the defensive.
In order to accommodate the dual role, all sorts of onerous safeguards have to be installed which supposedly address the conflict but even with these in place, public scepticism is prevalent.
The starting point of any market revival has thus got to be acceptance that investors do not believe in a regulatory framework where the frontline gatekeeper is a profit-driven entity and that without this belief, there can be very little confidence - SGX can issue a dozen consultation papers on ways to improve and strengthen the market and it can try to implement the best proposals from around the world, but it will always encounter resistance if this fundamental flaw is not addressed.
Once this is acknowledged, how best to split the duties of regulation and profit-making would be the next logical consideration. For a useful practical alternative, the authorities should look at Australia, where the granting of an exchange operator licence to Chi-X several years ago meant the Australian Stock Exchange was quickly relieved of most of its regulatory powers, these powers being then transferred to a non-profit regulator, the Australian Securities and Investments Commission.
Any joint effort here should be told that there are no “sacred cows”, no stone that cannot be overturned in the effort to bring about change for the better. Many areas will have to be visited to see if rules or measures governing them have actually proven beneficial or if they might be jettisoned with minimal impact.
One example is continuous all-day trading which has been in force for more than three years now and yet many believe has not proven beneficial in terms of adding liquidity or enhancing hedging opportunities.
Yet another is the unpopular and controversial practice of allowing firms to list via 100 per cent private placements. It must be hugely frustrating and disillusioning to the average retail investor to be told that the best performing initial public offerings (IPOs) this year have been those where all the shares were placed to selected parties and nothing was allocated to the public.
If retail interest is to return, shouldn’t the approach be to emphasise the “public” in IPO and not allow 100 per cent private placements to proliferate?
There are many other areas which have to be addressed - TR remuneration among them - and no doubt the combined minds of SGX, MAS, SRS, SIAS and SAS would be able to identify the more important.
The attitude throughout should be cooperation and not confrontation because as a BT letter writer correctly noted last week, many problems could be solved if everyone worked together. The sooner this happens, the better.