SINGAPORE STOCK EXCHANGE (Legislation to set up independent commission to supervise operation)

Mr Hwang Soo Jin asked the Minister for Finance if he will consider introducing legislation to set up an independent commission to supervise the operation of the Singapore Stock Exchange.

The Parliamentary Secretary to the Minister for Finance (Mr Tang See Chim) (for the Minister for Finance): Mr Speaker, Sir, I have been asked by my Minister to reply to this question and also to questions Nos. 10 to 13 inclusive appearing in the Order Paper today.

The answer to this question is no. The Government is prepared to allow the Stock Exchange of Malaysia and Singapore to continue to function as a self-regulating body in co-operation with the Ministry of Finance. Agreement has been reached between the Committee of the Stock Exchange and officials of my Ministry on the procedure to be followed by the Committee when considering applications for admission to the Official List in respect of Singapore registered companies.

For instance, in the case of a new floatation or the sale to the public of existing shares, it will no longer be sufficient to file with the Registrar of Companies a prospectus which meets the minimum requirements of the Companies Act. The promoters will in future be required to make a detailed disclosure of all material facts.

The Government is alive to the important role the Stock Exchange can play in fostering the development of a strong capital market in Singapore. The Stock Exchange will fail in this purpose unless it maintains high ethical standards and exercises sound judgment. Only then will it command the confidence of the investing public. At present, a good investment proposal will be readily over-subscribed. But if standards are relaxed and unsound ventures are foisted upon the public, this readiness to subscribe to new issues will no longer prevail. It has happened to the Stock Exchange of some developing countries. It must not be allowed to happen here.

So long as the existing arrangements for co-operation between the Stock Exchange and my Ministry work satisfactorily and help to maintain high ethical standards, the Government does not propose to set up any formal machinery for regulating the Stock Exchange, especially since the Exchange is still quite small.