A self-governing market: brokers have a role to play too

THE chief executive of Singapore Exchange Regulation (SGX RegCo), Tan Boon Gin, recently said his vision for the local market is for it to be better-quality and more mature, unstifled by overbearing regulatory frameworks.

"As a market regulator, our end goal is to eventually shape a marketplace where the regulator's presence is hardly felt or necessary. This means the market and participants are effectively self-governing," he said. Broking firms should take note of this and step up their game, particularly to minimise the instances that result in SGX RegCo having to issue Trade with Caution warnings.

The most recent such warning came last December for ISOteam. Prior to this, warnings were issued for trading on Kitchen Culture’s shares in August 2020, Vividthree Holdings in February 2020, China Haida in January 2020, Mirach Energy in November and September 2019, and Sevak in January 2019. In these and earlier cases, the common theme was that small groups of parties that appear connected to each other were responsible for the bulk of the trades over an extended period of time. In some cases, a share placement was either just conducted or was imminent, in others a price rise occurred at a time when the broad market fell. Sometimes, an application to exit an SGX Watch List was also cited. It will be interesting to see the outcomes of the ongoing investigations. In the meantime, it's worth asking what role brokers themselves should be playing in such situations.