… don’t tamper with it!
I’m prompted to write this rant after reading the letter in the Straits Times’ Forum (see below)
While I don’t agree with Mr Lim’s contention re the role of SGX (it’s been given that charter by the Government; so be it), what I think is absolutely necessary is for the public to scrutinise more closely what the SGX under its CEO Magnus Bocker has been doing — and intends to do — since he came on board.
First was the abortive and costly attempt to take over the Australian Exchange. It’s a no-brainer that it’s a no-go from day-one. Because how could Australia with its rather draconian Foriegn Investment Review Board let go of something as iconic as the country’s exchange for crying out loud! Yet SGX led by Mr Bocker tried to do a multi-billion $ Don Quixote! 🙄 And in the end was left with a multi-million $ bill for something that just wasted time and diminished SGX standing.
Another very expensive and to my mind ill-conceived investment is to pump $250 million (hello, a quarter of a billion bucks, OK!!!) into making SGX’s trading platform the fastest in the world. 🙄
To what end? When there’s neither current demand– nor foreseeable demand, at least not within Mr Bocker’s tenure, I don’t think, never mind if he’s already a permanent resident.
To me, the $250 million investment is like building a restaurant that will allow Singapore to boast of having the biggest eating hall in the world — when on a real-time daily basis just some one thousand or two meals would actually be served!
While that’s a wacky enough approach, it’s quite harmless lah, as SGX got the moolah to burn mah. A white elephant or two would go nicely with the bear and bull sculptures on its premises.
The label for the wackiest move belongs to the one that Mr Bocker unveiled as a X’mas present– unless he is stopped: to dismantle the Central Depository (CDP) which holders of SGX-listed securities have come to trust and rely on over 20 years of continuous use.
The reason for giving the CDP the chop? It’s already 20 years old! And all other stock exchanges allow their brokers to run their own scripless books on securities listed on their boards. Singapore mustn’t be different!
To me, that’s as clever a reason as saying since the US runs trillions of $ deficit, Singapore should do likewise. After all, the US is a developed country and no country worthy of the accolade of”developed” should be without crippling deficits, right? 😆
I’ve read many letters to the media regarding what a bad idea the proposed move is, with the writers fearful of rogue brokers who may make off with investors’ shares very much like scammers making off with $500K from DBS bank accounts.
That was indeed one of the reasons why the CDP was designed the way it is and it would do Mr Bocker well to trawl its history and understand the reasons before he brings in the demolition squad.
However unlike the people who fear rogue brokers, I’m more fearful of brokers who are good long-time friends who may suddenly be caught in the quagmire of a short squeeze and then beg me to help out with my few shares to enable them to cover.
In Singapore, unlike New York, London or even Shanghai, relationships and friendships aren’t of the six-degree or even five-degree separation kind; the separation is probably no more than two-degree at best.
And thanks to Mr Bocker — if he does get his way re the CDP — I won’t be able to pretend they are mistaken about what I hold, because they would know chapter and verse what I own exactly. Not a lot mayb but just enough with other clients to prevent their downfall!
Further, like one of the letter writers say, to let one’s broker know what SGX-listed shares one owns is tantamount to showing one’s bank account to another person. I would add it’s also like showing one’s pay slip to one’s friends and relatives; not acceptable, unless one happens to be Ministers of this realm where everyone and his dog demand a right to know.
Well, 99.99999999 per cent of CDP account members aren’t political office holders, so please Mr Bockker don’t in one fell swoop put us into their net.
Let me end with one more observation and one suggestion, if drumming up income for the SGX is the real reason behind Mr Bocker’s latest brain-wave.
Observation: it’s one of the most mentally-challenged reasons to suggest that if brokers know what’s in their clients’ accounts, they would be better able to help clients manage their investments. Even my toes laughed at such an idea. Has Mr Bocker any idea what the overwhelming majority of our stockbrokers actually do? Even if they do have the expertise and inclination to give advice, can remisiers — even with assistants — handle the number of clients on their books?
Suggestion: if SGX needs more income, then why not charge CDP members a small fee, based on the number of counters each owns? Or better still charge the moribund accounts more, on the rationale that active accounts do give the Exchange income via clearing fees!
Hard to reconcile contradictory roles of Singapore Exchange
Published on Jan 10, 2012
AS AN investor of a few public-listed companies, I am concerned by the dual roles of the Singapore Exchange (SGX) (‘China Sky defends non-compliance’; yesterday).
The SGX conducts regulatory oversight and enforcement functions over companies, but on a profit-driven corporate platform.
These dichotomous roles are clearly unhelpful towards crystallising its role as an impartial regulator, given its commercial interests in managing the financial service affairs of the industry.
The defence of China Sky over its obligation to comply with SGX’s regulatory requirements raises the question of the impact of such enforcement on the exchange’s bottom line. How can the SGX assure the public that imposing a composition fine on errant listed companies does not enrich the exchange’s top line and revenue structure?
Conversely, by not enforcing its listing rules over any public-listed company, how would the SGX defend the allegation that it did not seek any special favours from such fee-paying clients?
And what would be the related opportunity cost and revenue losses where enforcement was absent?
As a leading financial centre, Singapore must be seen to offer its services to foreign and local companies without fear or favour, especially when dealing with big corporations.
The SGX should cease all commercial interests arising from its regulatory compliance duties.