Singapore to speed up cross-listing of foreign ETFs with 3-month approval target

[SINGAPORE] Singapore is moving to significantly cut the time it takes for asset managers to cross-list foreign exchange-traded funds (ETFs) on the Singapore Exchange (SGX), as it seeks to broaden investment choices and attract more issuers.

SGX has been working with the industry on a “new streamlined approach” that will reduce regulatory friction and allow qualifying products to come to market within three months, a spokesperson for the bourse said in response to queries from The Business Times.

Over time, this will result in a wider range of exchange-listed products available to investors in Singapore, the spokesperson added.

The Monetary Authority of Singapore (MAS) on Jun 25 announced plans to cut the approval time and processes for non-traditional funds, but did not specify the fund types covered.

BT understands that it currently takes about two years for such foreign ETFs to come to market.

Under the existing framework, ETFs constituted in foreign jurisdictions may need to go through a prolonged process of regulatory scrutiny when cross-listing in Singapore, creating uncertainty and delaying issuers’ abilities to respond quickly to investor demand, the SGX spokesperson said.

The exchange noted that investor appetite for a broader range of investment and trading products has been growing.

It said that retail investors and digital platforms now account for more than 40 per cent of SGX-listed ETF assets under management, driven in part by the rising adoption of robo-advisers and model portfolios.

SGX-listed ETFs also serve family offices seeking to meet local investment requirements, on top of offering exchange-traded access to different asset classes, markets and strategies, while trading in Singapore dollars.

At the same time, SGX said it has observed a growing number of ETF issuer inquiries seeking to capitalise on rising investor demand in Singapore.

Global and regional ETF issuers are increasingly looking to expand beyond their domestic markets, the SGX spokesperson said.

There are 53 ETFs currently listed on SGX. In comparison, Hong Kong has 184. Some popular ETF products that Singapore does not presently have include leveraged and inverse single-stock ETFs.

Deputy Prime Minister Gan Kim Yong said in a Jun 25 speech that the objective of the move was “not innovation at any cost”, but to have “trusted innovation at greater speed”.

DPM Gan, who is also minister for trade and industry and MAS chairman, said the funds must still meet core requirements, such as those for governance and asset safekeeping, while underlying assets should be based on publicly traded securities and financial derivatives.

It will take three months to determine the necessary guard rails for the issuing of most new fund types, and three weeks for subsequent funds of the same type once the guard rails are established, he noted.

They will be tailored to address the unique risks posed by each fund type, with enhanced disclosures on novel features, he added.

MAS will consult on this new pathway “soon”.