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
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R Sivanithysivan
04 December 2014
The apology and explicit acceptance of responsibility from Singapore Exchange (SGX) chief executive Magnus Bocker for Wednesday’s computer system breakdown was the first indication in many months that SGX is willing to concede that things are not at all right with many aspects of its business. Mr Bocker’s statements that the exchange “takes full responsibility”, that the breakdown “should not have happened” and that its priority now is “rebuilding trust” are in stark and welcome contrast to the bland apology issued for “the inconvenience caused”‘ when the system went belly-up for three hours on Nov 5.
Up till now as SGX came under fire from many quarters for the dismal state the local equities market has found itself in this year, it appeared to even the most objective observers that the exchange operated in a bizzare state of denial - it declared the market to be of sound quality when it has been widely described by investors, brokers and the media to be in bad shape. Those who sensed a loss of confidence among the retail investing public attributed part of the blame to investigation into the penny stock crash of October last year taking longer than usual.
But while it is true that the penny stock investigation is beyond the control of the exchange as it is in the hands of other regulatory authorities, it is hard to say the same of Wednesday’s computer glitch, given that it was the second time in less than a month that the trading system went offline. It goes without saying that SGX’s critics have had a field day with some very choice remarks posted on Internet chat forums, many presumably by those who have contributed to an earlier online petition for Mr Bocker to relinquish his position.
That petition has probably run out of steam by now but it had its roots in frustration, unhappiness and anger within the remisier community that should be noted, if for no other reason than for the record. We could feature some of the latest Internet observations here, but it would serve little purpose other than make for entertaining reading; this however, is serious business and there are much more important issues that need addressing.
For one, the cost of the two breakdowns. The first is the monetary value - trading representatives, already suffering from drastically lower income because a large portion of the retail investing body has left the market since the penny crash, are not unreasonably claiming that they should be entitled to compensation for the loss of income suffered.
How to do this is debatable and if ever an estimate was to be made it could run into the millions - one proposal is to work out the lost turnover based on the recent daily average of S$1 billion and proportionately allocate this over the total six-hour disruption over two incidents and then calculate the brokerage foregone.
Others have complained of agonisingly lost opportunities: Hong Kong’s Hang Seng Index, for example, opened Wednesday with a large gain which meant that those who bought the Hang Seng’s call warrants earlier would have been able to sell out at a decent profit - provided the market had been open.
Since it was not and since the Hang Seng lost all of its gains by the time SGX’s trading resumed at 12.30pm, what should have been a profit had become a loss.
The Hang Seng example is just one of any number of frustrating situations that can arise when a system shuts down as it was on Nov 5 and on Wednesday so not surprisingly many in the market have raised very relevant issues relating to accountability within the exchange and penalties from the authorities that will have to be answered.
How to repair this? It will not be easy but the starting point has to be SGX’s overcoming its state of denial and admitting that instead of this being a quality market, there is something fundamentally wrong that needs fixing.
I will dump my money into the market once that happens..oh yeah.. restrict shorting as well. SGX is a shortist playground.