Sidestepping SGX's elephant in the room

THE proposed changes reported in The Business Times on Thursday ("Independent body for listing mulled'') in response to the penny-stock crash last October all look good on paper. They include the setting up of a listing committee, tighter listing rules and greater enforcement powers for the Singapore Exchange (SGX).

Will their introduction lead to better companies listing here, higher governance practices and greater investor protection? In theory they should. After all, who could reasonably argue with more screening and regulatory layers aimed at raising the governance bar?

Theory, however, is only one side of the governance coin; practice is less straightforward.

Throughout the SGX's 13-year history as a listed entity, it has had to periodically fend off criticism of its dual role as a profit-maximising regulator. When controversy erupts which provokes claims of lax regulation, the exchange has had to justify its structure and remind the market that there are enough checks and balances in place to ensure its regulatory standards have not been compromised by …