Published Date: 11 January 2022

"Exchanges (Demutualisation and Merger) (Amendment) Bill" - Second Reading Speech by Mr Alvin Tan, Minister of State, Ministry of Culture, Community and Youth & Ministry of Trade and Industry, and Board Member of MAS, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister-in-charge of the Monetary Authority of Singapore, on 11 January 2022

1. Mr Speaker, Sir, on behalf of the Prime Minister, I beg to move, “That the Bill be now read a second time”.


2. In 1999, the Exchanges (Demutualisation and Merger) Act (EDMA) was passed to facilitate the transfer of ownership of the Stock Exchange of Singapore (SES), the Singapore International Monetary Exchange (SIMEX) and the Securities Clearing and Computer Services, to an integrated exchange, Singapore Exchange Ltd (SGX). The exchanges were demutualised and merged into a single non-member run entity. The essential aim was to put the integrated exchange in a stronger position to hold its own internationally and develop new growth opportunities.

3. Through the demutualisation process, members of the two exchanges, SES and SIMEX, received a fixed dollar amount of shares in SGX and the remaining SGX shares were issued to SEL Holdings Pte Ltd (SEL), a special purpose company designated under the EDMA. SEL placed out some of the SGX shares to new investors and retained the rest.

4. This portion of SGX shares that SEL retained, which I shall refer to as the “Original SGX Shares”, are currently held by SEL for the benefit of the Financial Sector Development Fund (FSDF). MAS set up the FSDF in 1999 to support the development of Singapore as a financial centre. FSDF is controlled and administered by the Monetary Authority of Singapore (MAS), subject to the directions of the Minister-in-charge of MAS. The dividends and any proceeds in respect of the Original SGX Shares are channeled towards the FSDF to fund financial sector development initiatives in Singapore. This includes initiatives which develop sector-wide capabilities and infrastructure, promote financial innovation, upgrade skills and expertise, and support financial education. 

5. It should be highlighted that under the EDMA, SEL is not able to exercise or control the exercise of the voting rights attached to the SGX shares. This feature remains unchanged in the proposed amendments to the EDMA. This is important because it is not intended for MAS, in its capacity as FSDF’s administrator, to impinge on SGX’s capacity to make business decisions. This safeguard further enables MAS to play its roles as SGX’s regulator and FSDF’s administrator without conflict of interest.  

6. SGX announced on 5 August 2021 that it would be implementing a scrip dividend scheme (SDS) to offer its shareholders the option to receive all or part of their dividend entitlement in SGX shares. SGX has explained that this scheme would allow shareholders to re-invest their cash dividends in SGX’s medium term growth journey.

7. Currently, the EDMA allows SEL to receive new SGX shares where there is no election or choice on the part of the shareholders, such as when bonus shares are issued. It does not allow SEL the flexibility to elect to receive new SGX shares when these arise from corporate actions taken by SGX, such as scrip dividend schemes.  Amending the EDMA will give SEL flexibility to elect to receive new SGX shares arising from SGX’s corporate actions, where doing so is in line with FSDF’s interests. 

The Amendments

8. Mr Speaker, Sir, I will now go through the broad areas of amendments in the Bill.

9. The Bill will allow SEL, with the Minister-in-charge’s approval, to participate in SGX’s corporate actions under which SEL may opt to receive additional SGX shares. For instance, SEL could elect to receive scrip dividends in SGX scrip dividend schemes, which it is unable to under the current EDMA. 

10. The Bill will also provide that SGX shares acquired through such participation will be treated in the same manner as the Original SGX Shares. In particular, consistent with the Original SGX Shares:

  • SEL will hold the new SGX shares for the benefit of the FSDF;
  • SEL will not be allowed to transact with the new SGX shares without the prior approval of or direction from the Minister-in-charge of MAS; 
  • SEL will not be able to exercise the voting rights attached to the new SGX shares; and
  • The dividends paid in respect of the new SGX shares and any proceeds in respect of any sale of the new SGX shares, less expenses incurred in the sale of the new SGX shares, will accrue to the FSDF.


11. Mr Speaker, Sir, this Bill does not alter the basic objective of the Act, or the SEL’s purpose of supporting the FSDF. It only enables SEL to participate in corporate actions taken by SGX under which SEL may elect to receive new SGX shares. The new SGX shares will be treated the same way as the Original SGX Shares.

12. Mr Speaker, Sir, I beg to move.