SINGAPORE: The Singapore Exchange (SGX) will be implementing dual-class shares, according to its CEO Loh Boon Chye.
Speaking at the bourse operator's second-quarter results briefing on Friday (Jan 19), Mr Loh said that rules relating to dual-class shares will be announced at the end of this quarter, and that the first listing will take place soon after.
He said that the key focus of the dual-class shares is to assist companies make the transition into the new economy.
“Singapore is making huge efforts to transition into the new economy and we're already recognised as a leading hub for startups,” Mr Loh said. “Some of these companies may need a capital structure that supports a rapid scaling up of their business. The dual-class shares is one way, not the only way, is one way to do so.”
Mr Loh also said that the implementation of dual-class shares is in line with the Committee on the Future Economy report on the scaling up of new-economy enterprises.
“SGX has to move on with the times and support this need as a fundraising platform,” he added.
The decision to allow dual-class shares comes after almost a year of public consultation and SGX CEO RegCo Tan Boon Gin said that the results of the consultation will be released soon.
When asked for more details, he declined to reveal much except that the majority of people they consulted during the feedback exercise supported the implementation of dual-class shares.
The Monetary Authority of Singapore (MAS) said in a separate statement on Friday that it supports SGX’s decision to allow dual-class shares.
But the central bank also noted that there are some governance risks that comes with dual-class shares.
“MAS will review the safeguards that SGX will be proposing to mitigate these risks, as well as SGX’s education initiatives to help investors better understand the unique risks of dual-class shares structures,” the statement said.
SGX posted a net profit of S$88.4 million for its second quarter ending Dec 31, according to a media release by the bourse operator.
This is largely unchanged from the S$88.3 million reported a year earlier. Its revenue was up 3 per cent to S$205 million from a year ago.
Earnings per share also remained unchanged at 8.2 cents, along with the interim dividend per share which is still at 5 cents.
Revenue from equities and fixed income declined 4 per cent to S$97.5 million.
It accounted for 48 per cent of SGX total revenue.
SGX said in the statement that listing revenue grew 3 per cent to S$12.4 million on the back of a higher number of new bond and equity listings.
However, revenue from post-trade services dropped 15 per cent to S$25.4 million due in part to a change in the mix of securities settlement instructions.
Derivatives posted an 11 per cent increase in revenue to S$83.3 million.
Mr Jeremy Teong, an investment analyst at Phillip Securities, said that SGX's derivatives market turned in a much better performance than other markets as currencies and commodities are underperforming globally.
Mr Loh said in the statement that the bourse operator aims to keep pace with the momentum achieved in 2017.
"Besides expecting more listings, we will strengthen our Asian derivatives foothold through new product offerings in equities, commodities and foreign exchange," he said.