SGX to set up whistleblowing office as it enlists market players to tighten oversight

THE regulatory arm of the Singapore Exchange (SGX RegCo) plans to introduce new initiatives in a change of approach to market regulation that envisages the development of a market neighbourhood watch.

Measures include setting up a whistleblowing office and stricter inspection of the market professionals, starting with Catalist sponsors, said Tan Boon Gin, SGX RegCo chief executive officer.

Market professionals, such as sponsors and auditors, also have an integral part to play in preserving the integrity of the market, said Mr Tan.

"Those of you that are highly-ranked can create greater awareness on how to achieve better governance practices and standards. You can be leaders in the community, advocates for change, and mentors to those who aspire to the same heights," he said.

SGX RegCo's regulatory approach is primarily targeted at non-compliant companies, which constitute a small minority in the 750 listed companies on the SGX. This is to "avoid burdening compliant companies unnecessarily with over-inclusive rules that apply across the board", said Mr Tan.

But to achieve this, stakeholders must take it upon themselves to speak up for the community and protect the community from misperceptions and mischaracterisations, as well as offer a balanced perspective on relevant policy issues, he said.

Speaking at the launch of the Singapore Governance & Transparency Index on Wednesday, Mr Tan urged market professionals to "think in terms of being part of the equivalent of a market neighbourhood watch" and outlined the benefits of such a community.

"A (traditional) neighbourhood watch doesn't rely on regulation to achieve its objectives. The fact that these groups exist is a recognition that it is not possible to solve everything by regulation and enforcement alone. Some bad behaviour is best addressed by peer pressure, scrutiny, and advocacy," said Mr Tan.

Using conflicts of interest as an example, he noted that it is "impossible to legislate a chapter and verse against every single permutation of conflicts of interest". However, a sponsor or other professional advisors can step in to ensure that the company understands the rationale behind the governing rules.

"Within such a community, we can build a regulatory presence that goes beyond rules and regulators," said Mr Tan.

The concept of a market neighbourhood watch will encourage stakeholders to perceive the market as community, rather than an ecoystem, he said. Unlike an ecosystem, a community has a shared purpose and goal.

"Members of the community rely on each other and are able to trust one another because they all have a stake in the community. Because Singapore is small, the impact of just one thing, one wrong-doing, one incident, can affect everyone."

Mr Tan added that people in a neighbourhood watch are also "most familiar with the terrain and best able to tell when something is wrong".

For a neighbourhood watch to function optimally within the corporate or market community, stakeholders must first agree on a shared purpose and common goal - to uphold the integrity of the market. "It is in our collective interest that standards are kept high and everyone is doing what he or she is supposed to be doing," said Mr Tan.