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
Business Times, Editorial
05 December 2014
It would be somewhat unkind to conclude that this week’s market stoppage - the second in a month and third this year - is simply another dismal chapter for a market in malaise. But there is no denying that something is amiss. The numbers don’t lie.
Stockmarket turnover fell 21 per cent in the financial year ended June 30, 2014, to S$286 billion, according to Singapore Exchange (SGX). That is the lowest turnover since fiscal 2006, when the size of the total market was less than what it is worth today. Looking at turnover as a proportion of market capitalisation, the average turnover velocity in FY2014 was just 40 per cent, compared to 71 per cent back in FY2007. Average daily stockmarket turnover for the first 10 months of this year fell 29.8 per cent to S$1.06 billion from the same period last year.
Brokerage firms are reporting sliding earnings amid falling volumes and trading interest. Some two-thirds of all the 3,900 trading representatives (TRs) here barely transact two trades a day. And the top 10 per cent control about 80 per cent of the average daily business.
A dismal scenario if you are in the business. Yet, SGX continues to trot out selected numbers to support its claim that all is well. It insists that new rules that it has introduced will improve market quality and integrity. Fund-raising remains healthy, more CDP (Central Depository) accounts have been opened and volumes are higher than in 2008, when the global financial crisis hit.
If so, why are almost 200 TRs quitting the business every year, with few new entrants?
Of course, there are several factors contributing to this sad state of affairs. Equity-trading volumes across much of the world have not recovered to the levels prior to the global financial crisis of 2008. Many investors who lost fortunes never came back, and the number of new entrants doesn’t make up the difference.
The October 2013 penny-stock collapse hit the more speculative end of the market here, where volumes - and volatility - tended to be the highest. Regulations imposed in response to the event have scared away some market players. The removal of the S$600 clearing-fee cap and the smaller bid-ask size has crimped day trades. The impending introduction of collateralised trading could also impact volumes.
Of course, the market has also changed. In an age of algorithmic and online trading, TRs cannot expect to depend on a business model that worked a decade ago. They cannot remain mere order takers. As the Monetary Authority of Singapore itself noted, TRs can play a greater professional and advisory role by acquiring the requisite qualifications to provide more complete service to clients. As for collateralised trading, some of the US$3 billion worth of stocks held in the Central Depository could perhaps be directed to custodial sub-accounts at brokerages.
Other parties can play their part as well. Broking houses should re-look their commission structures to incentivise TRs. Perhaps a graduated scheme of commissions based on volume thresholds could be the way to go.
SGX, for its part, is roping in market makers to add liquidity. But it could also offer more products that retail investors - the main customers of TRs - will want to trade. The solution to the malaise is multi-fold. And it takes two or more to tango. Let the music begin. The market has been standing too still for too long.