SINGAPORE TELECOM SHARES (Banks undertaking responsibility of stockbrokers)

Mr Chia Shi Teck asked the Minister for Finance whether banks are legally permitted and sufficiently equipped to undertake the role and responsibility of stockbrokers for the Singapore Telecom shares and, if so, whether the precedent is set for banks to deal in more ``selected privatised'' shares in the future.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, the recent public offering of Singapore Telecom (ST) shares is by far the largest flotation in Singapore's corporate history. It attracted the largest number of Singaporean investors with more than 1.4 million Singaporeans subscribing for and being allotted ST's "A" and "B" shares. Before the flotation, there were only about 400,000 investors with CDP securities accounts.

In anticipation of the large number of people wanting to sell their ST shares during its initial period of trading, special SES trading terminals were set up at 107 branches of local banks located around the island. This is to provide members of the public with easy access to information about ST's share price, and to enable shareholders to sell their shares easily without having to go through a stock broking firm. Besides avoiding over-crowding at the stock broking firms, having the terminals located at various housing estates also reduces inconvenience to the investors, especially the senior citizens. They need not travel personally to the central business district just to sell a couple of hundred shares.

About 14,750 investors sold their "A" and/or "B" shares on the first day of listing of Singapore Telecom through these special terminals. The existing SES stockbroking firms would not have the capacity to handle such a large number of individual sellers in addition to the usual daily transactions in the other counters.

These special trading centres are set up specifically to only allow the investor to sell his ST "A" or "B" shares. Staff of the bank manning the terminals are not required to provide advice to investors on their share investments. Their job is just to key in the sell orders into the trading terminals to match the current best bid in the market. If an investor is unsure whether to sell his Telecom shares, he would be asked to consider the matter carefully before rejoining the queue to sell his shares.

Singapore adopts the universal banking concept whereby our banks provide a wide range of services to their customers. Banks are exempt dealers under the Securities Industry Act. Accordingly, they are permitted to deal in securities on behalf of third parties. All the local banks have their own subsidiaries which are members of the Stock Exchange. Hence, the branches where the special terminals are located are merely acting as agents of their subsidiaries in carrying out the share transactions.

Mr Chia Shi Teck (Nominated Member): Sir, if it is simply to facilitate the sale of shares, could there be other better methods, like using the telephone lines, instead of setting up the terminals?

Dr Richard Hu Tsu Tau: That may be difficult because you need to confirm a sale transaction and a verbal request may not be sufficient.

Mr Chia Shi Teck: The second question is whether the banks will play this role for future Government privatisation exercise.

Dr Richard Hu Tsu Tau: It will depend on the Stock Exchange and the size of future offerings.