SGX and SIAS respond to remisiers’ grouses
SGX says some issues raised have been or are being addressed; SIAS says shift in investor profile could have added to woes
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SGX says some issues raised have been or are being addressed; SIAS says shift in investor profile could have added to woes
Lee Meixian
06 February 2015
The Singapore Exchange (SGX) on Thursday defended itself by saying that some of the grievances raised by remisiers and investors in an appeal to Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam “have been, or are being, addressed”. SGX also said that it is constantly reviewing the market.
This was in response to a BT report that a group of remisiers and investors had written the appeal to express unhappiness with the state and direction of the local bourse and call for immediate remedies.
One recommendation in their appeal letter was for the setting up of “truly independent” committees when consulting the public on proposed policy changes.
To this, SGX said: “We actively engage market participants, relevant stakeholders and the public prior to introducing any new initiatives to the marketplace through public consultations. Initiatives are then introduced after approval from our regulators.”
It mentioned the recent reduction of the board lot size from 1,000 to 100 as an example of the result of such a public consultation.
This initiative has enjoyed some early success, and will likely draw more retail investors and help improve market liquidity. “Market enhancements do take time to yield results,” it said.
The Securities Investors Association (Singapore) - SIAS in short - also pointed out that it is common practice for SGX and the Monetary Authority of Singapore to hold public consultations and obtain feedback from all stakeholders on any policy and rule change, rather than have an independent committee review policy changes.
“This provides the opportunity for all stakeholders to have their say and therefore, it should continue,” David Gerald, president and CEO of SIAS said.
He added that SIAS is not in favour of increasing the limit for investment in equities from 35 to 80 per cent of the CPF Ordinary Account.
It also disagreed with the suggestion to transfer long-suspended stocks with governance issues to a third high-risk board and allow cash upfront trading for them.
These were two out of a number of suggestions put forth by the remisiers and investors.
Mr Gerald said raising the limit of the CPF Ordinary Account that can be used to buy stocks will expose retirement funds to excessive risks.
That said, he agreed that the quality bar for CPF Trustee stocks needs to be raised to ensure that only stocks of quality investible standards are included, as the CPF investment scheme is designed to help fund Singaporeans’ retirement savings.
“A more active review of the list of stocks and timely alerts to retail investors using their CPF funds to invest in these equities should be implemented,” he said.
As for the setting up of a third high-risk board for suspended stocks, he said it “would only drive speculation, as there is insufficient transparency and information for a fair and orderly market to operate”.
“Whilst it is important to continue to build confidence in our market, it should be done prudently and not encourage excessive risk and speculation,” he said.
On other fronts, Mr Gerald agreed that better rules for short selling disclosures and a review on regulations for sophisticated instruments are needed.
He concurred, too, that the market should be given regular updates on on-going investigations and that the SGX’s commercial and regulatory roles should be separated. Some of these are already under review, he said.
“SIAS is aware of the plight of remisiers in the current low trading volume market environment,” Mr Gerald said.
“One possible reason for the unhappiness faced by remisiers is heightened today by the shift in the investor profile. The fact that almost one-third of new CDP (Central Depository Pte Ltd) account holders are under 25, who tend to favour online trading versus dealing with remisiers, could also explain the plight of the remisiers today.”
The exchange is partnering brokers to organise “My First Stock Carnival” to educate new investors, and is also launching the SGX mobile app this weekend. “Investors also increasingly trade online, either with their mobiles or computers, a global phenomenon which will only accelerate,” it said. These efforts come on top of e-training and investor education exhibitions and events that it is already organising.