SGX probably has enough rules for now, says chief

CEO believes rights of small investors are adequately protected by existing rules


THE Singapore Exchange (SGX) believes a lighter touch is better than a heavy hand when it comes to running the rule over the market.

Or as chief executive Hsieh Fu Hua told The Straits Times in a recent interview: 'For now, we probably have enough rules, and we don't need new ones.'

Mr Hsieh believes the rights of small investors are adequately protected by existing rules, including the provisions spelt out in the listing rules and other codes.

Directors, for example, have their roles clearly defined in the code of corporate governance while the principles of corporate governance are also well-established through the Companies Act and the Council on Corporate Disclosure and Governance.

'In governing any market, you can't just take the view of minority shareholders. You also have to take the views of companies and their boards, and find the right balance,' said Mr Hsieh.

He also responded to calls from some quarters that the SGX should help to establish an informal body to mediate disputes between companies and minority shareholders.

He said: 'We must let those channels establish themselves. We can't narrow corporate conduct too much. We shouldn't be specific and dictate the conduct of everyone.

'That is what the market is for - to establish the framework.'

Mr Hsieh also addressed another area of concern among small investors: the high costs of a share transaction due to the need to pay two SGX charges - the clearing fee and the access fee.

'Compared with the total trading costs in other exchanges globally, we seem to come across pretty well,' he said.

'Some other exchanges even have fees for quotes. If you make a quote, you have to pay for the quote. Here, we don't charge for quotes so far.'

The clearing fee is for finalising a trade done through the SGX and has been around for a long time.

In recent years, an access fee has also been levied. This is to help fund 'open access' technology, which allows the SGX to introduce a wider array of products, besides share trading.

'The exchange's infrastructure cannot come for free. We pay for the investment and we have to keep renewing it,' said Mr Hsieh.

It is a 'pricing policy' whether the charges should be streamlined or kept as two fees.

Since last month, the SGX has cut the clearing fee from 0.05 per cent to 0.04 per cent of a trade's value.

The maximum fee applying to trades over $500,000, however, shot up 200 per cent from $200 to $600.

The access fee is levied at 0.0075 per cent of the value of the trade.

But Mr Hsieh declined to comment if the SGX would table changes on rules governing the trading suspension of firms when the listing manual comes up for review.

'Certainly, as an exchange, we encourage trading as much as possible to allow investors to get in and get out of stocks easily,' he said.

Mr Hsieh was also asked if the SGX would consider narrowing the bid-offer spread of 0.5 cent for stocks under $1 to lower the high 'frictional' costs involved in buying penny stocks.

He felt remisiers would prefer the status quo as the big bid-offer spread in percentage terms acts as an incentive to traders to generate trades on penny stocks.

The SGX has gone through many rounds of public consultation to fine-tune its rules, he said.

'The next consultation may catch you on something which you may not currently be aware of.'

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'In governing any market, you can't just take the view of minority shareholders. You also have to take the views of firms and their boards, and find the right balance.'