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In the case you described, SGX also earns more clearing fees or other fees as probably there would be more volume done due to bad news to conclude that SGX should never operate the exchange as it is conflict of interest.
I think it is a bit too far to say that there is conflict of interest in the case you described.
SBL is done on normal commercial terms, whether SGX's regulatory action would really bring huge benefit to its SBL program is debatable.
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(27-12-2011, 02:54 PM)freedom Wrote: In the case you described, SGX also earns more clearing fees or other fees as probably there would be more volume done due to bad news to conclude that SGX should never operate the exchange as it is conflict of interest.
I think it is a bit too far to say that there is conflict of interest in the case you described.
SBL is done on normal commercial terms, whether SGX's regulatory action would really bring huge benefit to its SBL program is debatable.
More regulatory red flags=====> more opportunities for shorting=====> more SBL fees
No?
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27-12-2011, 03:20 PM
(This post was last modified: 27-12-2011, 03:29 PM by freedom.)
(27-12-2011, 03:07 PM)Qiaofeng Wrote: (27-12-2011, 02:54 PM)freedom Wrote: In the case you described, SGX also earns more clearing fees or other fees as probably there would be more volume done due to bad news to conclude that SGX should never operate the exchange as it is conflict of interest.
I think it is a bit too far to say that there is conflict of interest in the case you described.
SBL is done on normal commercial terms, whether SGX's regulatory action would really bring huge benefit to its SBL program is debatable.
More regulatory red flags=====> more opportunities for shorting=====> more SBL fees
No?
1. in the case of regulatory red flags, the trading should be suspended, as in the case of China Sky Chem...
2. to a free market, non-naked shorts(through SBL) is nothing wrong. market should allow both long and short to create the equilibrium, except that an outright manipulation is happening.
3. it is difficult to prove that more regulatory flags are created by SGX to earn more SBL fees. more SBL fees is more like the likely consequence, rather than the original intention, I believe.
assume that regulatory function is done by another totally unrelated party, can we justifythat the unrelated regulatory party issues more regulatory directive to help SGX earn more SBL fees?
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27-12-2011, 05:06 PM
(This post was last modified: 27-12-2011, 11:24 PM by Qiaofeng.)
(27-12-2011, 03:20 PM)freedom Wrote: assume that regulatory function is done by another totally unrelated party, can we justifythat the unrelated regulatory party issues more regulatory directive to help SGX earn more SBL fees? Bingo!
The better option is that the regulatory function is done by another entity---- as is practised elsewhere (SEC in US).
That completely removes the conflict of interest.
Btw, I am not implying that SGX creates regulatory red flags just to earn SBL fees.
But, interests are not aligned when the regulatory arm and the other arm (SBL fee collection by CDP) contradicts and people see SGX's role as conflicted between profit making and regulatory supervision.
To have clout and unquestioned credibility, it is useful to have the 2 seperated.
______________________
Btw, for banks when they use Ur deposits to give loans, they are generating income which will enable them to pay interests to Ur deposits i.e. they are acting in Ur beneficiary interest.
For the CDP when they loan out CSCF ( or for that matter any other shares) shares under SBL , they are enabling shorts to bring down Ur share prices i.e. against Ur beneficiary interest.
Under bear mkt situations, the negative feedback loop can cause certain shares to have their prices persistently shorted down to worthless. So the CDP is not acting in spirit of ts fiduciary capacity/duties, by facilitating that process.
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The Straits Times
Jan 6, 2012
3 China Sky directors resign
Company's non-compliance with SGX directive reason behind notice
By Melissa Tan
SUSPENDED counter China Sky Chemical Fibre appears to have taken its unprecedented act of defiance of Singapore's financial regulators to a new level.
By press time last night, the firm had missed a final deadline of yesterday set by the Singapore Exchange (SGX) to appoint a special auditor to look into some questionable transactions.
It seemed unlikely that it will comply, considering that its three independent directors - Mr Er Kwong Wah, Mr Lai Seng Kwoon and Mr Yeap Wai Kong - quit the company yesterday in a dramatic late night notice to the SGX. Each cited the firm's non-compliance with the SGX directive as the reason for his resignation. A company secretary, Tao Li, also resigned.
Mr Er had just been appointed chair of the audit committee on Jan 1, and Mr Lai had been appointed chair of the nominating committee. Both could not be reached for comment.
Mr Lai's independence came into question after it was disclosed that his firm, SK Lai & Co, had provided accounting-related services to China Sky from 2008 to 2010. This was one of the red flags that triggered the SGX directive.
The SGX was also concerned over events surrounding a planned land acquisition in Fujian province that was later cancelled. All eyes are now on the SGX, which had not stated what action it would take if China Sky failed to meet the deadline. After an increasingly bitter war of words between the bourse operator and the firm, SGX issued the final deadline last Friday.
The SGX had the full backing of the Monetary Authority of Singapore, which issued a statement saying China Sky should comply with SGX's directive.
China Sky, which makes high-end nylon fibres, could not be reached for comment yesterday.
'It's not fruitful to second-guess what's going to happen,' said Mr Robson Lee, corporate lawyer and deputy secretary of the Securities Investors Association (Singapore).
'The exchange has to come out and explain what its next course of action will be, so the market is aware of the roadmap ahead. It's also time the audit committee came out to explain to the market how they feel about the compliance directive. All this is information the market ought to know.'
Some lawyers say that not complying with the request to appoint a special auditor could be seen as a failure to disclose required information to the exchange, a requirement under Section 203 of the Securities and Futures Act.
The SGX website states that the disciplinary action taken against breaches of SGX rules may include expulsion.
Trading in the counter was suspended on Nov 17, the day after the SGX directed China Sky to appoint the special auditor. The shares closed at 10.2 cents.
Based on that price, its 814.6 million shares outstanding give China Sky a market value of about $83.1 million.
There were 3,056 registered shareholders as of March 10 last year. About 48.86per cent are held by the public.
China Sky's substantial shareholders include Asia Fountain Investment, with 10.29 per cent, and Rock Mart Equities, which holds a 37.75 per cent stake.
Rock Mart Equities is linked to its chairman, Mr Cheung Wing Lin, and chief executive, Mr Huang Zhong Xuan.
The status of China Sky's financial statements for 2011 remain under a cloud.
SGX had said last week that it was 'prepared to grant an extension of time to the company to comply with its financial reporting obligations under the listing manual in order to facilitate the special audit'.
China Sky's external auditor, Deloitte & Touche, yesterday said it could not comment due to client confidentiality.
melissat@sph.com.sg
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As always, I reminded of one of Buffett's gems:
"In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you."
— Warren Buffett
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(06-01-2012, 10:36 AM)kazukirai Wrote: As always, I reminded of one of Buffett's gems:
"In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you."
— Warren Buffett
The problem is you won't know if they have integrity, until it's too late! 
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ID Lai Seng Kwoon (whose firm provided accting services to China Sky) quitted last night, together with the rest. Below is his resume:
Past Directorships: (for the last 5 years):
China Sun Bio-Chem Technology Group Company Limited
Hengxin Technology Limited
Landwind Medical Holdings Limited
Sino Construction Limited
Celestial NutriFoods Limited
China Milk Products Group Limited
Oriental Century Limited
Present Directorships:
Oceanus Group Limited
Looks like he is some plague or he's in cahoots with many of them!
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Sometimes people will not even get the connection even bare facts presented to them till literally strike home.
For most people who has no easy means to know about mgmt integrity. Smart filtering of groups will help narrow to improve our investment probability. Which is why i avoided investing in S-Chip without Exception.
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07-01-2012, 12:41 AM
(This post was last modified: 07-01-2012, 12:49 AM by Stocker.)
The chinamen hope SGX do them the favour to delist and wind up the company. this will save them the trouble of doing it themselves.
Chinamen are teaching them what is 正中下怀.
More to learn from them .
SGX was the one who invited them here to make easy monies , they will be stupid not to capitalise on this once in their life's time opportunity.
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