Mixed signals from SGX

[cfa]

That is reasonable to me. SGX is a regulator, not investment banker. One of the key mandates is to ensure fair, orderly and transparent market, rather to protect irrational investment behaviour.

How SGX handled countless fraudulent of S chips are fair , orderly and transparent ?

Do you mean that SGX should protect irrational investment behaviour?

Do you mean Listed companies with fraudulence committed by management should be protected by SGX ?

Most if not all were punished in one way or the other by SGX, weren't they?

One out of 10 ? Any of them go to jail or just a light fine ?

[Ben]

That is reasonable to me. SGX is a regulator, not investment banker. One of the key mandates is to ensure fair, orderly and transparent market, rather to protect irrational investment behaviour.

How SGX handled countless fraudulent of S chips are fair , orderly and transparent ?

Do you mean that SGX should protect irrational investment behaviour?

And what do you suggest SGX should have done? By extension, do you also blame the auditors for not uncovering these frauds since they have access to the company records? It is easy for us to say this should be done, that should be done, but in actual fact these things are just easier say than done.

You meant SGX will listen to suggestions from retail investors ?
Look at China Sky and other S chips , many have written to SGX/Sias but do SGX listen to them?
And what do you suggest the investing publics should do so that SGX will listen to them ?

As already pointed out by CityFarmer, SGX is a regulator, and one of its main duties is to ensure a fair, orderly and transparent market. It does not exist to please certain segment of the investing public or listed companies, but for the overall good of all.

[cfa]

How SGX handled countless fraudulent of S chips are fair , orderly and transparent ?

Do you mean that SGX should protect irrational investment behaviour?

And what do you suggest SGX should have done? By extension, do you also blame the auditors for not uncovering these frauds since they have access to the company records? It is easy for us to say this should be done, that should be done, but in actual fact these things are just easier say than done.

You meant SGX will listen to suggestions from retail investors ?
Look at China Sky and other S chips , many have written to SGX/Sias but do SGX listen to them?
And what do you suggest the investing publics should do so that SGX will listen to them ?

As already pointed out by CityFarmer, SGX is a regulator, and one of its main duties is to ensure a fair, orderly and transparent market. It does not exist to please certain segment of the investing public or listed companies, but for the overall good of all.

Oh ! Is it ?

[specuvestor]

I dont think it means anything material to those being hurt when punishment is meted out after blood is on the streets, though it should act as deterrent

OTOH I also dont think it is easy to detect fraud by auditors or investment community. Fraud by definition means the people inside knew the system and how to get around it. From Leeson 88888 account to Madoff. End of the day it is cashflow that exposes fraud, even for Satyam.

So to investors, main thing is to focus on how the cash moves and whether it is easily verifiable by auditors. But even then we have sagas of Golden Ugly during the AFC and Parmalet.

IMHO one way to mitigate this is to have a common fund to appoint auditors so that there is no direct link between the paymaster and those that are suppose to whistle blow

[minimax]

IN A recent speech, Singapore Exchange (SGX) chief executive Magnus Bocker urged investors to divest themselves of the shares of companies that do not act responsibly ("Making dollars as well as ethical sense"; Sunday).

Leaving aside the complexities of determining what is "responsible" investing, should the SGX be offering investment advice on capital allocation?

Perhaps the exchange itself needs more attention following the recent penny stock fiasco and resulting loss of investor confidence.

It was also troubling to learn that only 12 per cent of listed companies here are complying with voluntary risk management guidelines ("Few listed firms follow risk governance guidelines: Study"; last Thursday).

This was compounded by SGX deputy chief regulatory officer Richard Teng saying: "As regulators, you do not want to prescribe more and more rules. There's a cost to having new rules."

However, not having rules can exact a greater cost.

On the one hand, the SGX chief is encouraging companies to assume higher costs to "do the right thing", and stating that "transparency and disclosure are part and parcel of responsible business practice". On the other hand, his regulatory leadership is unwilling to impose the transparency and disclosure that are much needed, because of the higher costs involved.

The Monetary Authority of Singapore (MAS) has delegated to the SGX critical self-regulatory functions, which the regulator is unwilling to carry out because of costs. This conflict of interest between commercial and regulatory concerns, combined with a lack of clear focus on investor protection, weakens Singapore's status as a financial centre of the highest standards.

The MAS should eliminate self-regulation and dedicate itself, or a new entity, to investor protection, instead of delegating authority to a profit-making entity that is unwilling to take the tough actions needed to ensure investor interests are paramount.

Temasek has remained silent on this matter, despite being Singapore's leading investor, the SGX's largest economic shareholder and the supporter of the highest standards of corporate governance.

Those with an economic interest in the outcome simply cannot manage self-regulation. Investors paid a heavy price for the lessons of the financial crisis; it is about time we learnt those lessons.

[brattzz]

"Those with an economic interest in the outcome simply cannot manage self-regulation"

Very true indeed!

[CityFarmer]

@Minimax. Thank for the post. Let's have a productive debate on the issue.

First of all, we should have a clear understanding on the existing regulation structure, before any meaningful debate.

There was a long history leading to the existing regulation structure. A simplified descriptions of the structure are listed below

MAS - Key roles are supervisory, Rule amendments and updates, disciplinary action, issue directive procedure etc
SIC - key role is on the takeover code
SGX - day-to-day market supervision, and regulates base on existing Rules. Of course, the listing approval etc.

Stripping existing regulation function from SGX, i.e. the day-to-day supervision and regulation, is impractical IMO. It is equivalent of asking LTA/MOT to online monitor the MRT system to ensure compliance on day-to-day basis.

Looking forward to hear your view on the above.

[opmi]

MAS got tons of money from the demutualization of SES and SIMEX. So don't say no budget to do regulating the exchanges.

[Temperament]

"Those with an economic interest in the outcome simply cannot manage self-regulation"

Very true indeed!

Ha!Ha!
It's a paradox saying isn't it when applying to ourselves. We invest in SGX market if we can't control ourselves, we usually lose money too.