Forum: SGX move enhances S'pore's global financial standing

The Singapore Exchange's regulatory arm announced on Jan 9 changes to its rules on quarterly reporting. The reform scraps quarterly reporting for all firms, except those deemed at risk.
The Singapore Exchange's regulatory arm announced on Jan 9 changes to its rules on quarterly reporting. The reform scraps quarterly reporting for all firms, except those deemed at risk.ST PHOTO: CHONG JUN LIANG

The Singapore Exchange's (SGX) move is timely (SGX eases reporting rules for firms, but adds safeguards; and Experts welcome move by SGX to ease reporting rules, both Jan 10).

It has been a long time coming - two years - and will help to lessen the compliance burden on listed companies, and hopefully slow down the delisting velocity along with the attendant losses in SGX's liquidity and market value.

It is noteworthy that the European Union, under the Transparency Directive, and the United Kingdom, under the Financial Conduct Authority, had already removed their mandatory quarterly reporting requirements back in 2013 and 2014 respectively.

SGX following suit is, therefore, logical and will serve to bolster Singapore's status as a global financial centre.

Besides the compliance costs of quarterly reporting, research provides empirical support that mandatory quarterly reporting encourages myopic "short-termism" - the focus on short-time horizons by corporate managers and the financial markets which results in prioritising near-term shareholder interests at the expense of long-term growth.

Additionally, there are also issues of consistency and accuracy between quarterly reports and annual reports - these issues have cast a pall over the usefulness and information value of quarterly reporting.

Moreover, any concerns that the cessation of quarterly reporting may impair analyst coverage and the accuracy of analyst forecasts have also been proven by investment research to be largely unfounded.

SGX's initiative to scrap mandatory quarterly reporting obligations will no doubt enhance Singapore's standing both as a global financial centre, and an international IPO and listing hub.

Woon Wee Min