Important to keep up efforts to restore confidence in local market

IF there is an overriding truth about stock markets, it is that confidence is everything. Without it, a market has almost nothing going for it - investors will stop trading, liquidity will dry up and prices eventually drift ever lower.

For this reason, the authorities have been taking steps in recent months to boost confidence. In August, the Singapore Exchange's regulatory arm SGX RegCo announced that although wrongdoings are confined to a small proportion of the market, it will nevertheless be increasing efforts to deter such acts, including setting up a dedicated whistle-blowing office. SGX RegCo also announced that sponsors of firms listed on Catalist will be held to greater accountability because the role of sponsors is to provide oversight of their clients in terms of governance and rules compliance. Quite rightly, sponsors should be the first to answer when lapses emerge.

Also in August, the Monetary Authority of Singapore (MAS) published an MAS-SGX Trade Surveillance Practice Guide that sets out guiding principles to help brokers develop and implement processes in their trade surveillance operations so as to detect and prevent market misconduct. All these efforts have come about because retail investors are staying away, reportedly due to a loss of confidence, either in the system to look after their interests, or the market to deliver returns, or both. Going by the major market events over the past 25 years, this is perhaps understandable.