Media Releases
Published Date: 29 September 2003

SGX and MAS To Introduce Research Incentive Scheme


Singapore Exchange Ltd (SGX) and the Monetary Authority of Singapore (MAS) today announced details of the SGX-MAS Research Incentive Scheme.  The scheme aims to enhance research coverage of stocks listed on SGX and provide investors with more information to facilitate their investment decisions.

Companies listed on SGX and all qualified research firms are eligible for the scheme, subject to the approval of SGX and MAS.  Under the scheme, each participating research firm will provide regular research coverage on at least 15 stocks, and each participating listed company will be covered by at least 2 research firms.

Research reports generated under this scheme will be published on the SGX website and made available free of charge to the public.

To help defray the costs in providing the research coverage, each research firm will receive an annual sum of S$60,000 for every 15 stocks covered.  This will be funded from the S$7.5 million pool of funds jointly established by SGX and MAS in June 2003 for developing the securities and derivatives industry.  Participating listed companies will only need to pay a nominal annual fee of S$4,000.  Other uses of the S$7.5 million pool of funds will be decided later. 

SGX CEO Hsieh Fu Hua said, "Besides helping investors make better-informed decisions, this scheme will raise the profile of our listed companies and enhance the attractiveness of SGX as a listing venue."

Mr Shane Tregillis, Assistant Managing Director of MAS added, "We hope the scheme will be beneficial to both listed companies and investors.  We expect the quality of research provided to be of high standards and the scheme will facilitate greater investor understanding and interest in the SGX-listed companies."  

SGX-listed companies and research firms will be invited to participate in the scheme. The list of participating research firms and listed companies will be announced when responses have been received and collated over the next month or so.  The scheme will be offered for a period of 2 years, after which it will be reviewed by SGX and MAS.




The Scheme is open to the following, subject to the approval of SGX and MAS: -

  • All companies listed on the SGX Mainboard and SGX Sesdaq; and
  • All research firms that are licensed or exempted from licensing under the Financial Advisers Act (FAA) with an established track record in issuing or promulgating analyses or reports concerning securities. The research team should comprise of at least 3 analysts, with at least 3 years of relevant experience each.   

Research Reports

As a general requirement, research firms are expected to provide regular research coverage on the participating listed companies so as to facilitate investors in making informed investment decisions.  The frequency of research coverage should take into account developments and events that would have an impact on the financial position, liquidity and prospects of the company including, amongst others, material acquisitions/divestments of assets, change in business direction, change in management team, take-over of the company, etc. At the minimum, research firms are required to produce at least the following number of Reports in each year for each listed company on their allocated list:

  • One Initiation of Coverage Report within 5 months of allocation (applicable only to the first year of coverage);
  • At least two Coverage of Results Reports, corresponding to the half- and full-year results announcements by the listed company; and
  • At least two Update Reports to be issued at any time within the year, at the discretion of the research firm.

As each research firm would have its own style of presenting their research, it is the intention of this Scheme to allow research firms a degree of freedom in their individual expression of creativity. However, the quality of Reports should be of similar standard to those that the research firms currently issue on their own.  In this respect, the research firms agree to exercise their industry knowledge and professional judgement when producing such Reports.  At the minimum, Reports are expected to contain the following items that are commonly observed in research reports: -

  • Initiation of Coverage

    -  Background of listed company, which may include a description of its history, business, product and/or market segments;

    -  Discussion of risk factors surrounding the company;

    -  Analysis of company's recent financials including the balance sheet, profit & loss, cash flow statements and the analyst's forecast or estimates;

    -  Analysis of the listed company against selected listed comparables; and

    -  Valuation and Recommendation.

  • Coverage of Results

    -  Analysis of results performance and the analyst's opinion on the outlook for the company; and

    -  Valuation and Recommendation.

  • Update Reports

As an update report on a company could be triggered by a spectrum of events, thus the contents tend to vary depending on the situation as well. Generally, such reports would be expected to cover the following areas: -

-  Description of the event that triggered the report;

-  Analysis of the impact or influence of this event on the business prospects of the company; and

-  Valuation and Recommendation.