Disclosure-based regulatory system and investor protection ‘not mutually exclusive’: Chee Hong Tat

THE move towards a more disclosure-based regulatory system for Singapore’s equity market does not mean that protection for investors will be relaxed, said Chee Hong Tat, the Second Minister for Finance, on Friday (Feb 21).

“I think the two are not mutually exclusive, and they can be achieved together,” said Chee, who was speaking at a media briefing to provide a full update on the first set of measures proposed by the Monetary Authority of Singapore’s (MAS) equities market review group to boost Singapore’s equity market.

A second set of measures is expected to be announced by the end of this year, he added.

The review group announced its first set of measures last week (Feb 13), following consultations with stakeholders over the past few months to catalyse investor interest and boost the supply of quality listings, and to streamline the regulatory process for initial public offerings.

The various measures proposed by the review committee included consolidating the listing suitability and prospectus disclosure review functions in Singapore Exchange Regulation (SGX RegCo), as well as emphasising disclosure of the most relevant and material information to investors as part of efforts to streamline the prospectus requirements and listing processes.

Chee said that the changes were in response to feedback that the listing process – which currently involves both SGX RegCo and MAS – lengthens the time to market for prospective issuers and increases uncertainty for them.

Addressing concerns that the proposed regulatory changes could increase risk for investors, Chee, who chairs the review group which was set up last August, said that having more regulatory rules may not mean improved protection for investors.

“In the extreme case, you have cases where (companies) just provide a lot of information, but it doesn’t mean that investors will have greater clarity on the risk,” said Chee, who is also a board member of MAS.

He added that the review committee, which comprises private-sector and public-sector representatives, will consider how to reduce compliance costs and speed up the listing process for companies on the Singapore Exchange (SGX) while maintaining high corporate governance standards.

Market discipline to play bigger role

Loh Boon Chye, SGX group CEO, said that market discipline – in which market participants monitor risks – will “play a bigger role going forward” if the proposed regulatory changes are enacted. He added that SGX will work closely with MAS to prepare for these changes.

Loh said that the various measures proposed by the market review committee is a “milestone” for the ecosystem and will strengthen the local equity market’s competitiveness.

“The initiatives announced thus far will jump-start more capital into the capital markets ecosystem and stimulate interest in local stocks and listings.” said Loh.

Neil Parekh, a member of the review group and deputy chairman at the Global Finance & Technology Network (GFTN), described the regulatory measures as highly significant in an interview with The Business Times.

“I would put equal emphasis on regulation, and in my view, there are already plenty of good growth companies to consider,” he said.

He highlighted that many of these companies are in the tech sector, particularly fintech, consumer tech, and health tech, especially with the recent investments in AI.

Commenting further on the first set of measures, Parekh noted that they were “not piecemeal”, but “sizeable”, and are being implemented collectively by a single review committee.

He said that focusing solely on regulation while overlooking other aspects would miss a crucial element. Similarly, while he sees demand as the most important factor, neglecting regulation would be a mistake.

David Gerald, chief executive of the Securities Investors Association (Singapore), or Sias, said whether the proposed measures will lead to the launch of funds with substantial investments will only be known in time to come.

“We know that funds will invest in investments which give good returns, so it is too early to make predictions,” he said.