12 Aug 1998... The SES Review Committee submitted its report to DPM Lee Hsien Loong on 30 Jul 98. It made 46 recommendations, covering membership, brokerage commissions, regulations, new products and services.

2   The objective of the Committee's recommendations was to make our capital markets more international, competitive and robust. The Committee recognises the fundamental changes that are taking place in securities markets globally. Technological changes are altering the way capital markets function, and competition from international markets is increasing. Exchanges around the world are rapidly reorganising and transforming themselves. The Committee notes that the overriding imperative for the SES and the stockbroking industry is to upgrade, restructure and adapt to this fast changing environment. It believes that while the changes should be done expeditiously, they cannot be implemented overnight. There should be careful planning to ensure that it is instituted in an orderly manner.

3   MAS agrees with these key conclusions and with the thrust of the Committee's report. It accepts nearly all the Committee's recommendations. However, the Committee notes that on issues concerning ownership of SES member companies and the different categories of SES membership, the more fundamental question that has to be resolved is the structure of ownership and governance of the SES. The Committee has pointed to the need to study this issue, which goes beyond the ambit of its work. MAS and McKinsey will study the issue of governance of the exchanges as a matter of priority, in consultation with SES, SIMEX, and participants in the securities industry and the capital markets.

4   MAS' item-by-item response to the Committee's recommendations is in the attached Table. We have indicated our agreement or otherwise to most items so that the industry is clear on the direction to be taken and the follow-up to be done.

5   The response in the attached Table does not address recommendations which involve tax matters. Tax changes can only be announced upon implementation. The Government will study these recommendations and announce its decisions in due course.

6   The Government thanks Mr Lim Hua Min, Chairman of the Committee, and the Committee members for the extensive effort that has gone into producing a valuable report. When implemented, their recommendations will contribute significantly to Singapore's development as a financial centre.