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MAS may exercise more oversight over SGX in future

The fine-tuning of regulatory powers being considered by MAS is due to the arrival of other exchanges in Singapore, namely InterContinental Exchange (ICE) and EUREX, said MAS Managing Director Ong Chong Tee. 

SINGAPORE: The Singapore Exchange (SGX) will continue to have regulatory powers for now, although the Monetary Authority of Singapore (MAS) may exercise more oversight in areas like member supervision and market surveillance in future.

Speaking at the Singapore Equities Dialogue 2016 on Thursday (Jan 28), MAS Deputy Managing Director Ong Chong Tee said the regulatory powers given to SGX are not unique to Singapore.

Many global exchanges – including the New York Stock Exchange, the London Stock Exchange and the Hong Kong Exchange (HKEx) – have some form of self-regulatory organisations.

Mr Ong added that the fine-tuning of regulatory powers being considered by MAS was due to arrival of other exchanges in Singapore namely, InterContinental Exchange (ICE) and EUREX.

"We have also determined that there is scope to recalibrate the responsibilities of the exchange, vis-a-vis the MAS, in the areas of member supervision and market surveillance,” said Mr Ong. “The impetus for such a recalibration is not because we think that there is material or potential conflict-of-interest risk. Rather, as Singapore’s financial landscape features more than one exchange, it is not efficient to have each exchange carry out similar supervisory roles of common members."

SGX, for its part, said it will continue to review and improve its systems and regulations. One of the areas being considered is giving retail investors greater access to initial public offerings (IPOs).

"We will also continue our efforts to improve market access for investors, particularly retail investors,” said Mr Loh Boon Chye, CEO of SGX. “We had previously consulted on a proposal to allocate 5 per cent of shares in Mainboard IPOs to retail investors.

“We are considering this proposal and whether the amount should be higher. Some of you may question this given current market conditions. However, we must always build for the future and this is what this initiative aims to do."

SGX said it intends to introduce market structure initiatives in phases of six to 12 months, to give brokers and other stakeholders time to adjust.

With this in mind, collateralised trading of shares - which aims to minimise the risk of excessive leverage by investors - is now expected to begin in 2018.

"With MTP (minimum trading price) commencing in 2016, and the implementation of short position reporting six to 12 months later, we are looking to start collateralised trading in 2018," said Mr Loh. "With the durations between initiatives, we will also be able to step up on public education to better inform and engage market participants on the various upcoming changes."