Investors and brokers want Singapore Exchange stripped of regulatory powers

Investors and brokers want Singapore Exchange stripped of regulatory powers

Monday, 02 March, 2015, 10:34am

Reuters in Singapore

Singapore Exchange (SGX) may have just begun its search for a new chief executive but investors and brokers already know what change they want to see: the bourse stripped of its regulatory powers and a rebuilding of its stock market business.Unlike other major financial markets, Singapore does not have a dedicated securities watchdog. Instead SGX is the front-line regulator and is in turn regulated by the central bank, the Monetary Authority of Singapore.

Although credited with developing a strong derivatives business, SGX chief executive Magnus Bocker’s six-year tenure has also been marred by a big drop-off in stock trading volume – hit by scandals that have called the bourse’s regulatory prowess into question as well as by ferocious competition from Hong Kong’s exchange.

For many in the investment and trading community, Bocker’s impending departure in June represents the perfect time for the monetary authority to scrap the bourse’s regulatory role and establish an independent financial watchdog.

“SGX has an opportunity to reset its priorities,” said Michael Dee, a former investment banker and senior managing director at Temasek. “SGX has erred in giving a higher priority to their own commercial interests at the expense of investors and their protection.”

Asked to comment, SGX said it was aware there was a perception of a possible conflict of interest between its regulatory and for-profit roles but said it had a committee to manage any potential conflicts.

“SGX believes that the better we perform as a regulator, the better the quality of our market,” it said.

The monetary authority said exchanges in markets such as Australia and the United States also had a degree of self-regulation, and that it monitored SGX’s regulatory role closely.

Even before Bocker announced his impending departure, calls for a new watchdog had gathered steam. A group of more than 1,000 brokers signed a petition last month asking Singapore’s Finance Minister to intervene in the industry’s declining fortunes, with one of their main demands the separating of the roles of market operator and regulator.



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