Singapore Exchange Regulation (SGX RegCo) yesterday announced it will be introducing the use of artificial intelligence (AI) and other regulatory technology (regtech) solutions to enhance its oversight of listed companies.

It said these solutions will help to automate the extraction of data that can be used to compute "certain indicators of financial risks" based on SGX RegCo's observations of indicative signs of possible financial distress or irregularities in listed companies.

Such indicators include the existence of long outstanding trade receivables, significant asset write-offs, as well as low cash coverage ratio and negative working capital, among others.

SGX RegCo said it is expanding its regtech solutions to eventually include machine learning techniques and additional information sources, with a view to improving predictive capabilities in these areas.

SGX RegCo chief executive Tan Boon Gin said: "Using artificial intelligence and other technology, SGX RegCo is adapting information from companies' disclosures into structured data that can be analysed and used easily and speedily.

"The automation of such processes directs regulatory resources to higher-risk areas and enables us to be more targeted in our regulatory responses."

For instance, Mr Tan said SGX RegCo could issue disclosure queries, taking into account the above-mentioned indicators, and engage with the audit committee and external auditors where necessary.

Doing so together with issuers' responses to queries will provide transparency to investors on signs of possible financial distress or irregularities in listed companies, he added.

THE BUSINESS TIMES