Why SGX suspends, designates and investigates

PHOTO: Why SGX suspends, designates and investigates

The Singapore Exchange (SGX) has been asked about the differences in regulatory actions taken in the case of Sky One Holdings and in the case of Asiasons Capital, Blumont Group and LionGold Corp.

Not all sharp price movements warrant a suspension of the stock. Each occurrence has to be evaluated on its own merit in the context of circumstances of the case.

In the case of Sky One, the SGX's review of the circumstances revealed no threat to fair, orderly and transparent trading. Hence, no suspension occurred.

In the case of Blumont, Asiasons and LionGold, our review showed disorderliness in the market and lack of transparency that could also threaten the fairness of trading.

The same principle applies to the designation of stocks.

Each case is evaluated in the context of its own circumstances.

In the case of Sky One, designation was not necessary. But for Blumont, Asiasons and LionGold, designation was instituted to remove the froth of excessive speculation in the market and permit the fundamentals to assert themselves in determining market prices.

Both suspension and designation are measures that help to return the market to finding its own equilibrium.

For Blumont, Asiasons and LionGold, after the end of designation, the forces of supply and demand have reasserted themselves to determine the prices of the stocks. Normal trading conditions have resumed.

Investigation of market misconduct is separate and distinct from regulatory tools the SGX deploys to bring about fair, orderly and transparent trading in the market. It can be initiated by market activities observed during surveillance.

We understand the public wanting to know more about such investigations, but releasing information prematurely could jeopardise the integrity of the probe.

Furthermore, investigation into the trading of a particular security does not equate to the presence of wrongdoing. Nor does every investigation lead to conviction.

It would be unfair if the public announcement of an investigation tarnishes the reputation of the stock or of any individual investor.

Where market misconduct reflects possible breaches of the Securities and Futures Act, findings are referred to the relevant authorities that can exercise their statutory powers.

Readers may also want to refer to our regulatory announcement last Friday, "SGX corrects misconceptions", available on our website.

Richard Teng

Deputy Chief Regulatory Officer

Singapore Exchange

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