My post on LinkedIn can be seen here.
The MAS and SGX RegCo separately published consultation papers yesterday proposing various regulatory changes.
A Welcome Move Towards a Disclosure-Based Regulatory Framework
I applaud the proposed regulatory amendments pivoted to embrace the principles and market discipline of a disclosure-based regime. The proposed move-away from the present hybrid prescriptive-disclosure based regime is a regulatory change in the right direction. This will engender more IPOs in Singapore without compromising standards.
Responsibility and Market Discipline: Core to the New Approach
The spirit of a disclosure-based regime entails the directors of the issuer bearing full responsibility for the statutory and regulatory compliance requirements, while enshrining the market discipline of caveat emptor for investors and shareholders to take personal responsibility for their investment and securities trading decisions.
Attracting Foreign Issuers Through Regulatory Alignment
As major financial markets have adopted the IOSCO standards for prospectus compliance, it will attract more foreign issuers to do a secondary listing on SGX if the introduction document for a secondary listing can be adapted from their original offer documents in their home exchange without the need to additionally comply with the prescriptive requirements under the Singapore Securities & Futures Act.
Applying a Disclosure-Based Regime to Post-Listing Compliance
I am of the view that the full disclosure-based regime be similarly applied to post-listing documentary compliance and continuing listing requirements, such as circulars to shareholders, market announcements, and additional listing applications for new securities issuance. This will reduce the time to market for transactions that could be time-sensitive.
Issuers and their directors must take legal responsibility for all market disclosures – any tardy disclosures must attract robust enforcement actions by the market regulator and enforcement agencies. This will make the Singapore bourse more dynamic. Hopefully, this will also engineer a market culture that retail investors do not simply buy on hope, hold in greed, and sell in fear.
Investor Education and Robust Enforcement Are Key
A full reset of the current market discipline and culture must be complemented with investors’ education, and consistent robust enforcement of market rules and conduct. This is to enshrine the integrity of the Singapore market and go a long way towards fostering a dynamic Singapore bourse.
Supporting Retail Investors Through Legal Action
In this respect, it is perhaps timely for the Singapore market regulators to set up and fund an institution to financially assist retail investors (who are victims of market misconduct, fraud or scams) to institute class actions against errant persons and iniquitous issuers that have caused financial losses to retail investors.
Acknowledgement of Media Coverage
I am grateful to the Singapore Business Times, the Singapore Straits Times, and the Edge Singapore for publishing my views on the proposed regulatory reform. See attached.
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