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SGX's new regulatory unit to consider relaxing rules for listed firms

SINGAPORE (Nikkei Markets) -- The Singapore Exchange's new regulatory entity will look at simplifying or removing rules to ease the burden on listed companies, its chairman said on Thursday.

SGX announced the formation of the unit in July last year, aiming to separate regulatory tasks from its commercial and operating activities.

Singapore Exchange Regulation was set up earlier this month with Tan Cheng Han, former dean of the National University of Singapore's law faculty, as chairman. It is expected to start operations in August.

"There is a tendency for regulators anywhere in the world to add something (to the rulebook) because they are concerned about a particular event even though the probability of such an event happening might be relatively slim," Tan said at a media briefing.

"I'm signaling that I'm open to taking things out as well," he added.

Tan said SGX RegCo would report to a separate board and that the majority of its members would not be connected to SGX. The new subsidiary will not have any profit and loss responsibilities, and its funding will be determined by the board in consultation with the Monetary Authority of Singapore and SGX.

Board members, who are in the process of being identified, would take a fresh look at the regulatory environment as they try to balance the interests of different stakeholders, Tan said. Changes could include relaxing the quarterly reporting requirement for some companies.

The regulatory unit's creation comes in the wake of growing emphasis on governance in the city-state. Unlike in many major financial centers, Singapore does not have a dedicated securities watchdog. By having a separate regulatory company, Singapore will be better able to address conflict of interest concerns - in the past SGX has been accused of not being tough enough on listing applicants due to commercial considerations.

Stock market operators around the world are also grappling with developments such as the growing appeal of alternative fund raising platforms that allow companies to find new investors without having to comply with the tougher disclosure requirements that come with a public listing. In Singapore, several companies have opted to de-list from SGX with help from cash-flush private equity firms.

The new system whereby the regulatory responsibilities will be transferred to an independent subsidiary is based on business models used in countries such as Japan and Australia, SGX said.

The new company, which will have about 100 staff, will gather feedback from various stakeholders, including investors and listed companies, and will monitor developments in other countries that could affect Singapore's securities market, Tan said.

Looking ahead, Tan said that while the new system would assuage concerns about the regulator's independence, the advantage with the existing system is that it ensured those tasked with compliance and other regulatory functions were familiar with the industry and did not operate in silos.

To ensure SGX RegCo is attuned to the needs of various players in the securities market, one of its directors will sit on the board of SGX. Similarly, the unit's chief executive Tan Boon Gin will continue to be part of SGX's top management team.

"The eventual goal is not to burden the markets with more rules and regulation. Instead, we see SGX RegCo as a body that will shape the market to become more innovative, sustainable and efficient," Tan said.

--Kevin Lim

--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.

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