SGX addressing issues but results take time: Minister

The SGX has been hit by the global shrinking of the IPO pipeline as well as the rise of alternative financing, but it is "not sitting still", said Mr Ong Ye Kung. It has implemented measures such as a minimum trading price and the establishment of th
The SGX building at Shenton Way.PHOTO: ST FILE

It is creating new opportunities while tackling market slowdown and technical breakdowns

The Singapore Exchange (SGX) has embarked on a series of measures to address the market slowdown and technical breakdowns, but these initiatives will take time to bear fruit, minister Ong Ye Kung told Parliament yesterday.

And amid current challenges, certain segments of the stock market are performing well, while SGX is creating new opportunities, he said.

Mr Ong, who is Acting Minister for Education (Higher Education and Skills), was replying to Ms Sylvia Lim (Aljunied GRC) on behalf of Deputy Prime Minister Tharman Shanmugaratnam, who is Minister-in-charge of the Monetary Authority of Singapore (MAS).

Ms Lim had asked whether the Government was optimistic that SGX's performance and reputation can be revived, given issues like the lack of new listings, low market volume and trading disruptions in recent years. She also asked what role the Government saw for SGX in broader economic development.

The pipeline of initial public offerings (IPOs) has shrunk globally amid the weak economy and volatile markets, while the rise of alternative financing has also affected stock exchanges.

The SGX is similarly affected, but it is "not sitting still", Mr Ong said.

"It is building on its existing strengths, staying nimble to new opportunities and working to improve its system resilience," he added.

Mr Ong cited such measures as SGX's implementation of a minimum trading price and the establishment of three independent listing committees, which will help improve the quality of the market and new listings. The SGX is also moving its regulatory functions to a subsidiary company with an exclusive focus on the task.

Another new industry working group was also set up just last week to study ways to minimise the impact of trading disruptions. This follows the nearly six-hour stock market outage on July 14, and two other disruptions in late 2014.

"SGX needs to do better in reducing the frequency of disruptions and in managing any disruptions well," Mr Ong said, adding that the bourse is taking this seriously and MAS is closely supervising the progress.

"It will take time for the SGX's initiatives to bear fruit. But some improvements can be seen," he added, pointing to the 17 new listings here in the first six months, compared with a total of 11 last year.

Among the new listings this year were three major IPOs of real estate investment trusts (Reits), one of the SGX's key sectors that are still doing well. SGX plans to launch its first exchange-traded fund for Singapore Reits later this year, Mr Ong said.

Meanwhile, even as alternative financing - such as angel investors and private equity funds - dampens stock market activities, Singapore's financial sector will ultimately benefit from innovations in capital-raising.

"Notwithstanding one area of the financial sector (which) may be facing some lacklustre performance, (the) overall financial sector can actually continue to do well... We are seeing different kinds of financing options and it will still serve the Singapore market and Singapore economy very well," Mr Ong said.

A version of this article appeared in the print edition of The Straits Times on September 14, 2016, with the headline 'SGX addressing issues but results take time: Minister'. Print Edition | Subscribe