SGX Consults Market On Independent Listings Committees And Broader Enforcement Powers

Singapore Exchange (SGX) seeks public feedback on the proposed establishment of the independent Listings Advisory, Listings Disciplinary and Listings Appeals Committees (Listings Committees).

The Listings Advisory Committee will enhance SGX’s existing framework for managing actual or perceived self-regulatory organisation (SRO) conflict arising from SGX’s dual role as a commercial for-profit entity and a regulator of listed companies. SGX will also benefit from the perspectives of market professionals and representatives of the investment community in making its listing decisions.

The proposed Listings Disciplinary Committee and Listings Appeals Committee will enhance transparency of SGX’s disciplinary process and ensure fair and independent administration of sanctions.

SGX is also seeking public feedback on the widening of its enforcement powers against breaches of the listing rules to increase their deterrence value against offenders.

Today’s public consultation follows the Monetary Authority of Singapore (MAS) and SGX’s joint consultation in February 2014 on a set of proposals to enhance Singapore’s securities market.

1. 1.     Listings Advisory Committee

The Listings Advisory Committee (LAC) will consider listing policy issues and initial public offer (IPO) and reverse takeover (RTO) applications which meet certain criteria.

SGX is consulting the market on the framework for the LAC, including:

• the composition of the LAC to include 15 members appointed by its board in consultation with MAS. LAC members will have corporate finance, accounting or legal experience, or represent investment community
• the appropriateness of the proposed criteria for cases to be referred to the committee.

1. 2.     Strengthening the Listings Enforcement Framework

Proposals SGX is consulting the market on include:

• the widening of SGX’s enforcement powers including the power to offer compositions to issuers for breaches of the listing rules
• the widening of SGX’s enforcement powers over directors, executive officers and issue managers (advising on IPO and RTO applications) and financial advisers (advising on RTO applications).

1. 3.     Listings Disciplinary Committee

The Listings Disciplinary Committee (LDC) will hear charges brought by SGX against parties for breaches of listing rules and can impose regulatory sanctions if the charges are found to be made out.

SGX is consulting the market on the framework for the LDC, including:

• the proposal for the LDC to hear disciplinary proceedings against issuers, their directors and executive officers as well as issue managers and financial advisers, in relation to alleged breaches of listing rules
• the appropriateness of the wider disciplinary powers available to the LDC, including the issuing of public reprimands, imposition of fines against issuers, ordering the denial of access to market facilities by issuers, and ordering the suspension or restriction on the activities of issue managers and financial advisers for a specified period.

1. 4.     Listings Appeals Committee

The Listings Appeals Committee (LApC) will hear appeals from parties who are subject to sanctions by the Listings Disciplinary Committee, and from issuers which are subject to certain SGX regulatory decisions.

SGX is consulting the market on the framework for the LApC, including:

• the proposed scope of matters for which an appeals mechanism is available
• whether there are any other matters for which an appeals mechanism should be made available.

1. 5.     Catalist

SGX is consulting the market on proposals, including:

• the extension of enforcement powers over Catalist issuers, directors and executive officers
• the extension of the proposed composition framework against issuers to Catalist sponsors and registered professionals. 

1. 6.     Compliance Fund 

SGX is proposing to set up a Compliance Fund, which will comprise contributions from listing revenue currently paid by issuers to SGX and fines collected by the LDC, LApC and the existing disciplinary and appeals committees.  SGX is consulting on the proposed uses of the Compliance Fund, including the funding of investor education initiatives, operating costs of the Listings Committees, the existing disciplinary and appeals committees and the secretariat, and legal costs incurred by the committees.

SGX targets to introduce the listing committees in early 2015. The Consultation Paper can be viewed at http://www.sgx.com/wps/portal/sgxweb/home/regulation/consult_pub/consult_papers

SGX invites comments on its Consultation Paper until 16 October 2014 via: