Published Date: 04 October 2021

Explanatory Brief for Exchanges (Demutualisation and Merger) (Amendment) Bill

1 Minister for Finance, Minister Lawrence Wong, on behalf of Senior Minister and Minister-in-charge of the Monetary Authority of Singapore (“MAS”), Mr Tharman Shanmugaratnam, today moved the Exchanges (Demutualisation and Merger) (Amendment) Bill (“Bill”) for First Reading in Parliament.


The Exchanges (Demutualisation and Merger) Act (“EDMA”) was enacted in 1999 to provide for the demutualisation and merger of the then Stock Exchange of Singapore Limited, the Singapore International Monetary Exchange Limited and the Securities Clearing and Computer Services (Pte) Limited.

SEL Holdings Pte Ltd (“SEL”) is designated by the Minister as the special purpose company under the EDMA to hold Singapore Exchange Ltd (“SGX”) shares allotted and issued in connection with the demutualisation and merger (“Original SGX Shares”) for subsequent placements. The Original SGX shares are also held for the benefit of the Financial Sector Development Fund (“FSDF”)The FSDF is established under section 127 of the Monetary Authority of Singapore Act as a fund which shall, subject to the directions of the Minister, be controlled and administered by MAS.. The FSDF’s objects are as follows:Section 128(1) of the MAS Act

(a) the promotion of Singapore as a financial centre;

(b) the development and upgrading of skills and expertise required by the financial services sector;

(c) the development and support of educational and research institutions, research and development programmes and projects relating to the financial services sector; and

(d) the development of infrastructure to support the financial services sector in Singapore.

MAS is introducing legislative amendments to the EDMA to allow SEL, with the Minister’s approval, to subscribe to SGX rights issues, elect to receive scrip dividends in SGX scrip dividend schemes, and participate in other SGX corporate actions under which SEL may elect to receive SGX shares (collectively “SGX Corporate Actions”). The Bill will also provide that the new SGX shares will be treated the same way as the Original SGX Shares.


(I) Permit allotment or issue of SGX shares, arising from SGX’s corporate actions, to SEL

The Bill enables SEL to receive SGX shares through SGX Corporate Actions. This will allow SEL to maintain the value of SEL’s stake in SGX.

(II) Accord the new SGX shares similar treatment to the Original SGX shares

6 The Bill will provide that the new SGX shares will be treated the same way as the Original SGX Shares.

7 In particular, the Bill will provide that, consistent with the Original SGX Shares:
a) The new SGX shares shall be held for the benefit of the FSDF;
b) SEL shall not deal with the new SGX shares without the prior approval of or direction from the Minister; and
c) SEL shall not exercise or control the exercise of the votes attached to the new SGX sharesThis is the case because it is not intended for SEL to impinge on SGX’s capacity to make business decisions. Further, it is also to mitigate any perceived conflicts of interest that may arise, given that SEL is holding SGX shares for the benefit of the FSDF, which is controlled and administered by MAS, and MAS is the regulator of SGX. To further ensure that there are no conflicts of interest, independent directors have been appointed for SEL. These independent directors have a fiduciary duty to SEL..