Carrots and variety a good way to improve market regulations

THE Singapore Exchange's (SGX) recent suggestion to fast-track well-behaved companies' corporate action applications is a positive sign that its newly restructured regulation arm is aiming for a more discerning and efficient regime.

Tan Boon Gin, chief executive of the recently set up SGX Regulation (Regco), said in a speech this week that there might be scope for regulatory "carrots" to encourage companies to improve their corporate governance standards. He raised the possibility that companies with a good track record of governance and submissions could receive fast-tracked approval for certain corporate actions, or could even be allowed to skip regulatory scrutiny in some instances.

That line of thinking bodes well for the market on two fronts. First, it suggests that the regulator is thinking of rules as incentives and not just as deterrents. Second, it reflects a recognition that too many one-size-fits-all regulations can be a bad fit when there is too much variance in the population.