The following has been circulated by email by remisier representatives who had two meetings with the Monetary Authority of Singapore on 17 February 2015 and 4 March 2015. We republish the content so investors and other parties can appreciate the remisiers' perspective, irrespective of whether they agree or not with the points below.
Points raised by us at the meetings
1. Rebuilding Trust In Our Markets & Ensuring A Level Playing Field For All
a. Computerised Trading Systems - Is it a level Playing Field ? - Fine line between providing liquidity & influencing prices to a large extent. Proper Price-Discovery not taking place.
Willing Buyer Willing Seller Basis not functioning well as it is supposed to be.
b. IPO Process - At least 25% of shares issued to public for proper price discovery to take place
Should be Initial Public Offer instead of Initial Private Offer.
c. Short-Selling Reporting Requirements - Intra-day shorts to be excluded.
For mistakes on short-sales (for amounts less than S$50,000), reporting not required unless these "mistakes" are regularly made to circumvent this rule.
Uphold the uptick rule in shorting so as to prevent indiscriminate shorting and wealth destruction.
d. FT STI Index - Only 30 Stocks. Easy for large institutional funds to influence the Index.
3 banks make-up 32% of Index. 3 Banks & Sing Tel & Jardine Matheson make-up 50% of Index.
FT STI Index to be made-up of the 100 largest capitalized stocks with no individual stock weightage more than 5%. FT STI 3,365 points as @ 31st Dec 2014 , 6.25% increase in 2014
However, many of the 766 listings are lower & some small-caps even lower than 2009 lows.
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a. Clients sitting for Exams - Do away with it Simple 1 to 2 page Risk Disclosure Statement with risks clearly explained to investing public. Risk is inherent in any investment. We cannot regulate risk. Do away with Specified Investment Product & Excluded Investment Product Classifications. b Teletext - Bring it back to the free-to-air channels. Savvy Senior Citizens have the time & money and very comfortable with Teletext. c. Buy-in Process - Previously for mistakes made, it can be rectified the following day by buying back via Error-In-Trade A/C. Now, for mistakes made no avenue to correct it the next day. Charges 0.75 % Brokerage fees + S$ 75 penalty fees inclusive of GST. Also, if Buy-in not satisfied need to appeal for waiver of penalty S$ 1,000 or 5% of Contract value whichever higher. For mistakes on Buy-in market penalties of up to S$ 50,000 can be imposed. Also, even if a mistake to indicate as a CPF trade subject to Buy-in Process. Using a sledgehammer to whack a tiny ant.
It also provides investors an avenue to cover any accidental short-sales without subjecting themselves to the costly buy-in process. Scrip Lending - creates a 2-way market - Currently SGX has this facility but some houses not providing it to due to cost concerns. e. Bid - Spreads - Earlier Days, Less than S$1 - 0.5 cent, S$1 to S$3 - 1 cent, S$3 - S$5 - 2 cents, S$5 to S$10 - 5 cents & S$10 or more 10 cents. Now , Less than 20 cents - 0.1 cent, 20 cents to S$2 - 0.5 cent & S$2 or more - 1 cent. Proposal - less than 10 Cents - 0.1 cent,10 cents to 20 cents - 0.2 cent,20 cents to S$1 - 0.5 cent S$1 to S3 - 1 cent, S$3 to S$ 5 - 2 cents, S$5 to S$10 - 3 cents & S$10 & greater - 5 cents. f. Dynamic Circuit Breaker - +/- 10% for equities above 50 cents but circuit breaker to be in place for 1 hour instead of 5 minutes for adequate dissemination of market information. g. Cap of S$600 of clearing fees per counter per day should be re-instated. Only for Individual Omnibus Accounts & not Nominee Accounts. Improves liquidity of the market. h. A minimum 5% Collaterised Trading creates more paperwork & confusion amongst the investing public. Either you have full Margin-based investing or the current system where the Broker who is worth his salt will be able to manage the risk. For Margin-based Investing reasonable interest must be given for cash balances sitting in the Margin Account. |
3. Maintaining The Quality Of Our Listings
a. World-Class Government Linked Companies like PSA, PUB, PWD, Changi Airports International, Surbana etc to be considered. Creates more diversity & depth to our markets.
b. Cross-border listings within ASEAN - Initially Top 20 companies by Market-Cap.
Must have primary listing in Home Country & a secondary listings in the other ASEAN countries. Currently, China-based companies & to a lesser extent other countries are incorporated in Tax Heaven countries (Cayman Islands, British Virgin Islands).
For retail investors very difficult to seek recourse for Corporate Governance issues.
c. Creating A Third Board - Cash Upfront basis so less likelihood for prices to be manipulated.
Let the proper price-discovery process to take place with all relevant information disclosed.
Give a chance for companies to make a come-back when fundamentals improve.
Don't Give A Death Sentence But A Live-Sentence With A Chance For Parole.
4. Due Consultation With Various Market Participants
a. Proper platform for the various market participants to bring-up issues.
Form Working Committee/Independent Committee comprising members of the Broking Community, Investing Public, MAS, SGX & Academics. Have quarterly meetings documented & proper follow-up. All pertinent policies to be implemented should be approved by this Committee.
b. Issues brought-up in the Press or other means should be responded to.
5. More Effective Surveillance And Appropriate Policy Measures
a. Separation of the roles of Market Operator & Regulator. In Audit Standards parlance, not only must the Regulator be independent but must be SEEN to be independent.
To function effectively the Accelerator pedal (SGX) & the Brake pedal (MAS) should be distinct and not one pedal doing both functions.
b. Investigations to be concluded within a reasonable period of time. Blumont, Lion Gold & Asiasons investigations going on for 16 months with no updates so far.
c. Broking House Trade Restrictions to be made under Corporate Announcement in the SGX website instead of the Securities Association of Singapore website.
d. "Trade With Caution" of not much use. When queries are made by SGX on unusual price movements with cookie-cutter responses by companies that they are not aware of any circumstance warranting-it, further investigations must be carried-out if they suspect something amiss. Prior to takeover offers, some prices move-up sharply & thorough investigation must be carried-out to see whether there was insider trading.
6. Developing Our Fixed-Income Market
a. Corporate Bond Offerings to be reduced to sizes of S$ 1,000 each. Regular public education carried out by SGX about investing in Bonds, just like for equities.
7. Investing CPF Funds To Provide Adequate Retirement Funding
a. CPF Investment limits to be re-instated back to 80%. Criteria for CPF Trustee Stock should be stringent to include a profit track record of at least 3 years & dividend yields of at least 3%.
More companies will aspire to be CPF Trustee Stocks.
8. Re-instatement of Lunch Breaks
a. Continuous all-day trading has not worked. Looks like it is meant for Computerised Trading Systems. The Broking Community as well as the Clients are not in favour.
10% of daily trading volumes occur from 12.00 p.m. to 1.30 p.m. If Lunch-break reinstated, this 10% volume will most likely dissipate to the other trading hours.
First Session - 9.00 a.m. to 12.00 p.m. & Second Session - 1.00 p.m. to 4.30 p.m.
Half-hour before Hong Kong Opens & Half-hour after Hong Kong Closes.
9. Role of Trading Representatives
a. What is the role of Trading Representatives ? Are they mere order takers?
b. Moving-up the Value Chain like managing investors' money (say up to S$200,000) with adequate safe guards. Just like Contractors who went on to become Property Developers.
Commissions plus fee-based income.
c. Commission sharing of 40% (Trading Representative) & 60% (Broking House) not fair to TRs. Should be at least 50%. TRs not only bear 100% Credit risk but also 100% Execution Risk.
Earlier days Bye-Laws stated as such & the practice has been carried-out till today.
