Question: To ask the Deputy Prime Minister if he will (a) update the House on the latest position on the Central Limit Order Book (CLOB) saga and whether there is a solution in sight; and (b) clarify the role of the Securities Investors Association (Singapore) and whether the Association is in a position to handle the issue satisfactorily.
Answer: 1. I last updated Parliament on the Clob issue in August. The Stock Exchange of Singapore ("SES") had submitted a proposal to the Kuala Lumpur Stock Exchange ("KLSE") on 5 July of this year, suggesting a staggered release of Clob securities over 12 months. The proposal was without prejudice to SES' rights under the CDP-SCANS agreement.
2. KLSE subsequently sought clarification on SES' proposal. In particular it asked for assurance that the staggered crediting of Clob shares would not be detrimental to the Malaysian stock market. KLSE wrote to SES twice, on 15 July and 5 August. SES responded with relevant data and calculations demonstrating that the resulting impact should be minimal. SES replied to KLSE's first letter on 23 July, and KLSE's latest queries were addressed by 3 September. There has been no further response from the KLSE since. SES sent a reminder to KLSE on 15 Nov 1999.
3. We believe that SES' proposal is reasonable and addresses Malaysia's concern of volatility on the KLSE if Clob shares were to be released all at once. The Securities Investors Association of Singapore ("SIAS") has also indicated its support for the proposal.
Malaysian Private Sector Offers
4. Members would have read in the papers about several private sector offers. The offerors have been in contact with the SES, and also with the Registrar of Companies and Businesses ("RCB"). The Central Depository ("CDP") as bare trustee will carry out its obligation to inform Clob investors of these offers when requisite regulatory approvals are obtained. RCB will register prospectuses that are submitted if they comply with the Companies Act's requirements.
5. RCB has stated that it will take all factors into account, including the views of SIAS, into account when deciding whether it is in the public interest to register the offer documents. Some of the private offerors have been in communication with SIAS. But so far none of the proposals have reached fruition.
6. The SIAS has played a useful and independent role, representing the interests of Clob investors. That interested and public spirited Singaporeans have come forward to volunteer their services to tackle this problem is very heartening, and bodes well for the development of civil society in Singapore.
7. The SIAS has recently formed a financial advisory group comprising experienced practitioners in the securities industry, which will help SIAS to evaluate private sector offers independently and objectively, before making its recommendations to Clob investors.
8. Recent articles in the Malaysian press have suggested that resolution of the Clob issue would be a priority for Malaysia after the general elections. Singapore hopes this will be the case, as it is in the interest of all parties to resolve the issue fairly and expeditiously.