SGX takes serious view of market misconduct

SGX takes serious view of market misconduct

Certain misconceptions could be created by senior correspondent Goh Eng Yeow's column ("Tougher action needed on dubious share trades"; Monday).

The Singapore Exchange (SGX) takes a serious view of market misconduct. We devote significant resources to detecting and investigating possible misconduct, and work closely with the statutory authorities to take action against offenders of the law.

Investigations into possible breaches of the Securities and Futures Act, including insider trading and market manipulation, are needed to preserve market integrity but are distinct from regulatory tools deployed to maintain a fair, orderly and transparent market.

Investigations are undertaken to review trading conduct and possible transgressions. The power to secure records and interview suspects resides with state agencies that are vested with police-equivalent powers.

Investigations into possible trading misconduct do not equate to the presence of wrongdoing and do not necessarily lead to conviction. Hence, in line with international practices, these are normally conducted without a suspension of trading in the securities concerned.

The SGX, as a front-line regulator, does not possess state powers. But in line with other international exchanges, we employ regulatory tools such as public queries to extract yet-to-be-disclosed information, designation and suspension of securities to maintain a fair, orderly and transparent marketplace.

Tools such as designation and suspension are used sparingly and in exceptional cases where anomalies in trading are observed, to protect the interest of the market. These measures are intended to end as soon as possible to minimise disruption to the market. It is inappropriate to compare the powers available to the United States Securities and Exchange Commission (SEC) with those of the SGX.

The SEC, a national government agency, has powers to conduct investigations and enforce securities regulations. Where enforcement is concerned, the SEC is empowered to interview witnesses, compel them to testify, examine brokerage records and commence civil or administrative proceedings.

In Singapore, the power to investigate and enforce securities regulations resides with statutory agencies.

Comparing trading on an over-the-counter market with a listed platform, as suggested in the article, is also misplaced.

Richard Teng

Chief Regulatory Officer

Singapore Exchange

This article was first published on August 2, 2014.
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