Response to "Urgent action needed to restore confidence to Singapore market" - The Business Times, 3 October 2015
14 Oct 2015
The Editor Business Times
A well-functioning securities market is a shared responsibility
I refer to Mr NS Nallakaruppan’s letter “Urgent action needed to restore confidence to Singapore market” (The Business Times, 3 October 2015).
MAS has indeed been working with SGX and various stakeholders to strengthen Singapore’s securities market. Some of these measures were mentioned by Deputy Managing Director, Mr Ong Chong Tee in an opinion editorial on 26 June 2015.
A key set of initiatives centres around retail investors having access to a broader range of simple, low-cost capital market products to invest in. Blue chip equities are now more affordable with the reduction in lot size from 1,000 to 100 shares. Investors also have access to a wider range of less complex Exchange Traded Funds which they can trade like shares. Measures will be put in place to make it easier for corporate bonds to be offered to retail investors by the end of this year.
We agree with Mr Nallakaruppan that the remisier community still faces challenges. There are no easy solutions. Technological advances and changing investor preferences mean that the traditional role of remisiers has to evolve away from a pure execution model. MAS, SGX, and the Institute of Banking and Finance have been working closely with the broking industry to develop programmes that can help remisiers upgrade themselves and deliver higher value-adding services to their clients.
Mr Nallakaruppan mentioned the Minimum Trading Price (MTP) requirement as a particular area of concern. His feedback is not new but is not universally shared. Indeed, many stakeholders have expressed support for MTP as a necessary step to improve the quality of listings on the SGX. It also serves as a reminder to listed companies to continually improve their fundamentals.
It is also important to place the MTP issue in context. The number of companies that are potentially affected by the MTP requirement accounts for 1.8 per cent of our total listed market capitalisation, and 2.4 per cent of the average daily trading value measured over September 2015. The issue at hand is therefore how best to help the affected companies meet the MTP requirement. SGX has and is continuing to engage each affected company to help it adjust to the new requirement.
A well-functioning securities market is a shared responsibility. MAS will continue to work with SGX and other stakeholders to address or mitigate any concerns associated with the implementation of various measures to create a more robust securities marketplace. This is important for Singapore to be a competitive and vibrant financial hub in Asia.
Bey Mui Leng (Ms) Director (Corporate Communications) Monetary Authority of Singapore