Big steps forward to cultivate better market conduct and boost confidence

TWO significant events unfolded recently that underscore efforts by the Singapore authorities to futureproof the regulatory framework and deter misconduct in its financial markets.

A week ago, the Monetary Authority of Singapore (MAS) released a report that captured its enforcement chops over an 18-month period up to December 2018. The inaugural report provided rare insights into the nature of the regulator's probes and focus areas that have in turn led to fines and convictions of market intermediaries such as financial institutions, traders and advisers.

The enforcement outcomes over the period included one criminal conviction for false trading, fines worth nearly S$17 million on over 40 financial institutions, 19 orders barring individuals from working in the city state's financial sector, plus 223 warnings, 37 reprimands, 31 letters of advice and 444 supervisory reminders issued mostly to financial institutions and individuals.

Last Wednesday too - six years after the penny stock saga, which rattled the Singapore bourse - the much-anticipated trial began on the case. One of the three defendants in the case was sentenced to three years' jail after he pleaded guilty to abetting in a conspiracy to artificially inflate the share prices of three counters.

This week, the trial involving the case's alleged mastermind - Malaysian businessman John Soh Chee Wen - and his alleged co-conspirator Quah Su-Ling began, with both pleading not guilty to 189 charges and 178 charges respectively.

The saga, described by prosecutors in court as the "most audacious, extensive and injurious" case of market manipulation in Singapore, wiped out S$8 billion in market value across the three counters.

The fallout dented confidence and trading sentiment in the local bourse and now - as the gripping details of the scheme and stock rout involving multiple individuals, companies, as well as local and foreign brokerages emerge from the trial - the harsh spotlight is once again on Singapore.

Two scandals of grave proportions have rattled the city state's financial realm in the past six years - the penny stock saga and the illicit money flows of Malaysia's state-owned 1Malaysia Development Berhad.

In the 1MDB case, that prosecutors labelled the most complex, sophisticated and largest money-laundering operation here, there have been several convictions, and a total of nearly S$30 million in fines slapped on eight banks for lapses in anti-money laundering processes, with two Swiss private banks ordered to shut down.

Other corporate scandals of relatively smaller scale but still significant from a big-picture context - such as the troubles of Noble Group - have also unfolded over this time.

Against such a backdrop, the Singapore authorities have taken significant steps to beef up its regulatory wherewithal, be it in relation to money laundering, insider trading or plain-vanilla corporate disclosures to cultivate better market conduct and confidence.

But zealous policing in itself is not enough to protect the integrity of the financial system. In this light, MAS' recent pledge to keep the public in the loop and issue the enforcement report every 18 months is another big step forward. In doing so, the regulator is also acknowledging the widely-held view that greater transparency is indeed one of the central pillars of effective regulation.