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LIFT-OFF: (from left) SGX chairman J.Y. Pillay, guest of honour UOB chairman Wee Cho Yaw and Mr Hsieh at the industry launch of Catalist yesterday. Mr Pillay notes that with Catalist, the SGX has struck a balance between giving firms a quick way to list and protecting investors' interests. -- ST PHOTO: DOMINIC WONG
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THE Singapore Exchange (SGX) is pressing ahead with its plan to launch a new board to replace Sesdaq next month despite the turmoil engulfing global financial markets.
The initiative is part of SGX's strategy to attract both small, fast-growing firms and large ones to list in Singapore, suggesting that the timing of the launch is not dependent on market conditions.
SGX is also confident that Catalist, as the new board is called, will be able to compete with rivals such as London's Alternative Investment Market (AIM) by offering Asian companies a viable alternative listing destination.
Like AIM, Catalist will feature professional financial advisers - known as sponsors. These will play a key role in ushering a firm through the listing process and mentoring it while it stays on the board.
The biggest attraction will be the reduction in the timeframe for the listing process from 12 to 17 weeks on Sesdaq to just five to six weeks for the new board.
Phillip Securities managing director Loh Hoon Sun said: 'This is a step in the right direction. Firms that have to turn elsewhere after failing to meet mainboard requirements will now have a chance to list here.'
SGX chief Hsieh Fu Hua said the new board, which takes effect on Dec 17, will not cannibalise listing hopefuls that would otherwise have gone to the mainboard.
'Our expectation is that both markets will grow. Companies will have two different platforms for listing,' he added at the Catalist's industry launch yesterday.
Asian firms may find the new board attractive as the 'initial costs of listing and ongoing costs of listings will be significantly cheaper than London - at least 33 per cent cheaper', he said.
As most trading interest in Asian stocks has stayed in Asia, SGX has the advantage of being in the same time zone as most of the investors, unlike the 'London-centric' AIM. But the new board will not be open to real estate investment trusts or business trusts, or exotic sectors such as bio-sciences.
Mr Hsieh emphasised that companies on the new board will be held to the same standards as those on the mainboard even though their listing documents and circulars would be reviewed by the sponsors, rather than SGX.
'The quality of our market is as good as the quality of our supplies,' he said. While SGX will not directly supervise firms on the new board, it 'retains the power to discipline and ultimate accountability'.
The key to Catalist's success - sponsors - will be regulated by the SGX.
Mr Hsieh said the initial list of sponsors, which will be unveiled in January, will be 'pretty tight' as SGX 'wants to work with the better ones on the marketplace'.
A number of parties - from here and overseas - have expressed interest in becoming sponsors. These include investment banks and boutique corporate finance houses.
The SGX is also appointing an advisory panel of market experts to advise it on the admission of sponsors. There will be two tiers. A full sponsor will offer a whole gamut of services, which include ensuring that a firm is eligible to list and preparing it for listing.
The continuing sponsor will help a firm with its compliance on listing rules.
The SGX has also relaxed the rules to allow companies on the new board to be more flexible in their corporate moves. They will have a wider mandate for issuing new shares and more leeway to make acquisitions or disposals without going back to shareholders for approval.
Meanwhile, existing Sesdaq firms will enjoy a transition period of at least two years after the establishment of the new board.
They can transfer to the mainboard if they meet its listing criteria, or engage a sponsor to remain on Catalist.
As an incentive to convert to the new board, SGX is offering them a three-year waiver on listing fees.
engyeow@sph.com.sg
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