Singapore Exchange to co-operate with China regulators in vetting new S-chip listings

A new approach that involves local and Chinese regulators collaborating to vet potential China listings should improve investor confidence in the S-chip sector, according to the Singapore Exchange (SGX) on Monday.

The reforms could also attract more listing aspirants amid a recent dearth of mainland firms seeking a place on the SGX.

Investors have bailed out of S-chips - China firms listed here - after a spate of corporate governance scandals undermined confidence in the sector.

The so-called "direct listing framework" between the SGX and the China Securities Regulatory Commission (CSRC) announced on Monday could turn that sentiment around.

It will allow Chinese-owned companies incorporated on the mainland to seek a listing here once they have obtained the approval of their CSRC regulators.

That would formalise a very straightforward but unpopular route for new China firms that want to list here.

The vast majority of the 140 so-called S-chips listed here via a less direct route. The listed entity is actually a holding company incorporated in a place like Bermuda or the British Virgin Islands, which in turn holds the China assets.

The direct listing framework will now do away with the need for offshore holding vehicles. The process starts with an interested company filing its application with the CSRC and SGX. CSRC will review it before granting approval for the firm to list in Singapore.

The SGX will conduct its own review and green light the listing if the firm passes its tests.