Singapore Exchange (SGX) announced today it will establish a separate subsidiary company (RegCo) to undertake all the front-line regulatory functions it currently performs. The move aims to further enhance the governance of SGX as a self-regulatory organisation (SRO) by making more explicit the segregation of its regulatory functions from its commercial and operating activities.
RegCo will be governed by a Board of directors separate from that of SGX. The Chairman of RegCo’s Board and a majority of its directors will be independent of SGX and its regulated subsidiaries including SGX-Securities Trading, SGX-Derivatives Trading, Central Depository and SGX-Derivatives Clearing. All directors of RegCo will also be independent of any other corporation listed on SGX. RegCo will be responsible for discharging all of SGX’s market regulatory and supervisory functions and will report to its own Board in this respect. The Chief Regulatory Officer of SGX will be the CEO of RegCo and report directly to RegCo’s Board.
The SRO model is widely adopted by exchanges globally albeit in different forms. SGX closely monitors developments in the SRO area and regularly considers enhancements to assure continued regulatory robustness. Following the setting up of the independent Listings Committees in October 2015, the establishment of RegCo will add to the safeguards in place to ensure high governance standards in the regulation and operation of SGX markets.
The establishment of RegCo will not add to the requirements of the current IPO listing process. This is consistent with ongoing efforts to rationalise regulatory functions performed by MAS and SGX.
The Monetary Authority of Singapore (MAS) will continue to directly regulate SGX in terms of its obligations as a listed company and market operator, as well as maintain oversight of SGX’s regulatory responsibilities as performed by RegCo. SGX will be directly accountable to MAS for ensuring the adequate provision of resources to RegCo in order for it to discharge its regulatory functions. SGX expects to set up RegCo by the second half of 2017.
LoH Boon Chye, CEO of SGX
Loh Boon Chye, CEO of SGX
“The decision to house our entire Regulation unit in a separate subsidiary with its own governance structure was made after a long and careful deliberation. The new arrangement and the October 2015 introduction of the independent Listings Committees demonstrate our commitment to do all that we can within the SRO framework to address potential conflicts between our commercial objectives and our regulatory responsibilities. This will further enhance the robustness of our SRO framework.”
Tan Boon Gin, Chief Regulatory Officer of SGX stated:
“My team and I look forward to taking on our role and responsibilities as the front-line regulator within this new structure. This arrangement will keep us close to market developments while effectively separate from the commercial side of SGX. We will continue with our initiatives to improve the quality of our market including our partnership with industry professionals and companies.”