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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Kenneth Lim
27 June 2015
Market stakeholders welcomed a review of the dual role of Singapore Exchange (SGX) as a regulator and a commercial business, a day after the Monetary Authority of Singapore (MAS) said there could be scope to do so.
“A listed company should not be a regulator,” Securities Investors Association of Singapore (SIAS) president David Gerald said, reflecting comments made by others.
In an opinion published in Singapore media on Friday, MAS deputy managing director for financial supervision Ong Chong Tee wrote: “In a more competitive multi-exchange landscape, there is a need to mitigate potential conflicts of interests and ensure efficiency in regulation. For example, there could be scope to reduce any overlaps between the oversight functions of the MAS and the exchanges.”
When pressed for what oversight functions, exactly, may be overlapping, MAS did not elaborate.
But the rest of the market certainly had some ideas.
To begin with, the gripe is not that the regulatory system in Singapore is necessarily bad.
Mr Gerald said MAS’s recent reprimand of SGX over a major market outage showed that the financial authority was “doing a good job” in its oversight of the exchange. And SGX, Mr Gerald said, was “run by men of integrity”.
Indeed, MAS has long argued that the current regime, in which SGX is both a regulator and a commercial exchange, posed no fundamental issues.
Still, the principle behind a listed company that was also in charge of the rules was problematic, Mr Gerald said, adding that SIAS will take up the matter with MAS.
One possibility mentioned was to shift regulation of exchange members - the brokers and dealers - to independent, self-regulated organisations, using a model such as the Financial Industry Regulatory Authority (Finra) in the United States. Finra, which regulates securities brokers, is governed by the industry and members of the public, and reports to the Securities and Exchange Commission.
One senior trader in Singapore, who declined to be named, said SGX cannot remain a regulator once another exchange enters the country. “You can look at some of the other markets,” the trader said. “Australia, where you have more than one exchange, the regulatory body must be above the exchanges...In all of those models, it would suggest that an overarching body that’s not involved as a beneficiary of any of the rules should be the one in charge of the rules.”
Whether a Finra model will work in Singapore is debatable, the trader said. For a start, Singapore’s market may not be big enough to justify another layer of bureaucracy. If MAS simply assumes the oversight function, that might also allow for faster changes when policymakers feel a need to address certain aspects of the market. “The question is whether an independent body can actually be better than the MAS...You have an eco-system already. Will this new structure be better?” the trader said.
Joy Tan, who jointly heads the financial services regulatory practice at Wong Partnership, noted that criticism of Finra in the wake of the global financial crisis revealed the risks of industry self- regulation without strong government oversight. “What has been seen with industry self-regulation is the risk of other external influences or even regulatory capture, whether real or perceived,” she said.
Whatever form change takes, it might be time to start thinking about it, seemed to be the consensus.
“Has the securities market in Singapore come to a stage of maturity where you can split the commercial and regulatory functions? I would say the Singapore market has become a lot more mature. . .It’s heartening that they’re looking into the matter,” said Phillip Fong, managing partner at Harry Elias.