ENHANCING disclosures and having new products and investable assets are some of the market's needs amid a changing environment caused by the Covid-19 pandemic, said Singapore Exchange Regulation (SGX RegCo) chairman Tan Cheng Han.

Speaking on Friday at the SGX Regulatory Symposium 2021, Prof Tan said Covid-19 has accelerated and intensified some prior trends. These include increased digitalisation, the pushback against globalisation and heightened attention to sustainability and related issues.

One area of disclosure that SGX RegCo has been paying particular attention to is the role of sustainability and climate-related disclosures, Prof Tan said. The regulator plans to launch a public consultation in the coming months on its own sustainability reporting rules.

SGX RegCo chief executive officer Tan Boon Gin said: "Thus far, we have mandated a sustainability reporting requirement, but not a format, because there are many recognised reporting standards and no convergence on a single unified standard."

However, Mr Tan noted that with the recent focus on climate and the acknowledgment that harmonisation of standards would be helpful, a consensus appears to be building around the recommendations of the Taskforce on Climate-related Financial Disclosures.

"We are planning to consult the market on whether we should incorporate the recommendations into our rules. In other words, introduce a format for climate disclosures," he said.

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While there is clearly an international push for a single standard, Mr Tan said it was unclear how long that would take. He added that the bourse has engaged market participants and is already able to discern specific areas where more precise disclosure is wanted.

Even as SGX RegCo encourages issuers on enhancing their disclosures, Prof Tan said the investing community also needs to play an active part in their decision making.

He observed that it was common for people to speak and think of specific disclosures as binary - either the disclosures have been made, or not.

"But disclosures vary in their comprehensiveness and clarity, so each disclosure exists on a continuum," he said, adding that there is always an element of judgment involved on whether information is material and deserving of being disclosed.

He urged investors to be aware of this and internalise such considerations in their assessment of risks. Prof Tan added that investors are now increasingly empowered, with the ability to obtain information from a variety of sources, corroborate information provided by issuers, and question and engage investee companies.

"Social media and other tools have also enabled investors - now more than ever before - to mobilise and act collectively," he said. "Such active participation by investors is to be encouraged, as enhanced interaction and engagement can only contribute to the overall health of our market."

One of the effects from the Covid-19 pandemic has been greater interest in the financial markets worldwide from retail investors, which is likely to continue post-pandemic. Retail investors have also been empowered by the rise of social and alternative media, as the incident involving Gamestop and other "meme stocks" also demonstrated, Prof Tan said.

"While we welcome greater investor interest and participation in the market, this also brings with it a heightened focus on investor protection issues."

Amid the higher retail interest in financial markets has also been a re-emergence of products such as Special Purpose Acquisition Companies (SPACs) and digital assets. SGX RegCo launched a consultation in March on the possible introduction of SPACs in Singapore.

Mr Tan said: "Ultimately what we want is to have a quality company listed on our exchange post de-SPAC, and as far as possible, we want to make sure that sponsors and investors at every stage are aligned in terms of achieving that goal."

He added that if SPACs are rolled out, the market would need to prepare itself for it. This includes educating retail investors on the structure, and training directors of SPACs on their duties.

With market activity at multi-year highs, SGX RegCo is also looking to ensure that regulatory attention continues to be directed accurately.

Chew Chin Yee, head of regulatory development and policy at SGX RegCo, said it has used a technology solution since March to provide early warning signs of potential financial distress and irregularities. The solution computes financial risk indicators, and will help SGX RegCo take pre-emptive action, if needed.

Mr Chew added that SGX RegCo has also introduced artificial intelligence enhancements in its market surveillance. "We want these to be melded with our real-time trade monitoring system," he said. "This allows us to generate higher quality alerts and increase efficiencies for the market."

Prof Tan noted that crises such as Covid-19 and the global financial crisis are an "ineradicable feature of human existence". With greater complexity and new products, risks to the market from such incidents would also rise.

He said: "As a regulator, we will do our best to react in a calibrated and appropriate way; and while we actively monitor developments and stand ready to respond, usually the better long-run approach is to be watchful and not overreact - for instance through the hasty imposition of rules that subsequently have to be walked back."