SECURITIES INDUSTRY (AMENDMENT) BILL

Order for Second Reading read.

4.16 p.m.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Members are aware that our Securities Industry Act was drafted on the basis that a common Stock Exchange between Singapore and Malaysia would continue to exist. Certain provisions of this Act, accordingly, gave legislative recognition to the existence of the joint Malaysia and Singapore Stock Exchange. The decision of the Malaysian Government to discontinue the joint Stock Exchange and to operate its own stock exchange independently has, therefore, radically altered the existing legislative position. One of the immediate consequences of this decision has been that Singapore was obliged to create its own separate Stock Exchange and, as we all now know, this new Stock Exchange is called the Stock Exchange of Singapore Ltd. The former joint Stock Exchange of Malaysia and Singapore is in the process of being dissolved and no longer operates a stock market in Singapore. The only stock market in existence in Singapore is the stock market of the Stock Exchange of Singapore Ltd. This Stock Exchange has been approved by me under section 6 of the principal Act. With all these developments, it will be readily appreciated by Members that amendments will need to be made to the principal Act to bring the Act into line with the new factual situation.

The Explanatory Statement explains the nature of the amendments that arc proposed. I need not elaborate upon them except to say that with the repeal of section 98 of the Act legislative recognition will no longer be given to the former joint Stock Exchange of Malaysia and Singapore. The new Stock Exchange of Singapore Ltd, will now operate independently with its own Rules, Bye-laws and Listing Requirements. Members of the Stock Exchange of Singapore will henceforth deal with members of the Stock Exchange of Malaysia in the same way as they deal with members of any other foreign stock exchange, whether they are in London, Hongkong or elsewhere.

The dissolution of the joint Stock Exchange has not, up to the present time, materially affected the total number of companies quoted on the new Singapore Stock Exchange. From this total the Singapore registered companies number 76 and the Malaysian companies number 154. The balance is made up of 45 companies registered overseas, mainly in the United Kingdom. It may he of interest to Members to learn that during 1972 (and the previous years of 1970 and 1971 were not all that different), of the total turnover of units on the former joint Stock Exchange something like 60 per cent to 70 per cent of this total turnover was attributable to Singapore share dealing transactions, though I should stress that it is difficult for technical reasons to be precise as to the exact contribution to total turnover made by Singapore and Malaysia. It is, however, true to say that the greater part of the total turnover of units is over the last few years attributable to dealings in Singapore. Again, the total paid-up capital of the Singapore registered companies in 1972 was $1,275 million compared with Malaysian companies which was $1,460 million, and total market capitalisation for Singapore quoted companies is approximately 50 per cent higher than that of Malaysian quoted companies. The turnover value of shares of Singapore quoted companies in 1972 was approximately three times higher than in Malaysia.

As for dealers in securities, there are 17 member-companies and one member-firm consisting in the aggregate of 63 stockbrokers - the member-firm referred to will in the next twelve months be converting itself into a member-company. Additionally, there are 277 dealers' representatives (formerly described as dealers and remisiers). Both these factors, that is to say, the number of companies quoted on the Stock Exchange and the number of brokers operating are relevant in relation to the viability of a stock market as, of course, are the number of investors and share traders who are prepared to risk their monies at any particular time.

From the Singapore Government's point of view, it would welcome the continuance of the present position whereby Malaysia registered companies continue to be quoted on the Stock Exchange of Singapore. But even if it should come to pass that some of these companies, for one reason or another, cease to be quoted here there are good grounds for believing that the Singapore Stock market would be a viable one. In this connection, I should mention that ii is the policy of the Government and of the Stock Exchange to encourage the listing of new companies that come up to the standards for listing laid down by the Stock Exchange and the Securities Industry Council. This policy will extend not only to local companies but also to companies of international standing that are registered outside Singapore that wish to have a listing on our Stock Exchange. Conversely, subject to guidelines laid down by the Securities Industry Council, Singapore companies will not be discouraged from seeking listings on foreign exchanges.

All this does not disguise the fact that the creation of a separate Stock Exchange in Singapore has created teething problems for the Stock Exchange Committee. Many of the initial difficulties brought about by the sudden transition to a separate Stock Exchange have, however, I am glad to say, been successfully overcome. The Committee has faced up to its problems in an energetic and business-like way which augurs well for the future of the new Stock Exchange. The Committee has brought out New Rules for the Exchange which are a great improvement on the old Rules. These Rules take into account the provisions of the principal Act which affect the Exchange and its members. The Committee has also published in booklet form its policy with regard to corporate disclosure. Since this policy is very much concerned with the maintenance of a sound and healthy market and with fair treatment to investors, the Government expects all listed companies to comply with the new policy. They must also pay strict regard to the new Listing Requirements that have been prepared by the Exchange and sign without delay the necessary undertaking to be bound thereby.

In the absence, therefore, of adverse factors that cannot at present be anticipated, we can, I venture to say, look forward in the years ahead to increasing growth of this Exchange. In the context of Singapore's development as a financial centre, it would not, I think, be over-sanguine to predict that the Stock Exchange will assume much greater importance than hitherto, both from a local and international point of view.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Hon Sui Sen].

Bill considered in Committee; reported without amendment; read a Third time and passed.