SGX to Transfer Regulation Function to Separate Subsidiary

The move is aimed at managing potential conflicts of interest between SGX's commercial and regulatory roles.

Singapore Exchange (SGX) has announced that it will set up a separate subsidiary company, known as RegCo, to perform all the front-line regulatory functions it currently undertakes.

According to a statement issued today, the move aims to further enhance the governance of SGX as a self-regulatory organisation (SRO) by making the segregation of its regulatory functions relating to its commercial and operating activities more definitive.

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This will further enhance the robustness of our SRO framework.

As a result, the chairman of the new subsidiary company and a majority of its directors will be independent of SGX and its subsidiaries, including SGX Securities Trading and SGX Derivatives Clearing.

Self-regulatory organisation

The SRO model is widely adopted by exchanges globally albeit in different forms. SGX closely monitors developments in the SRO area and regularly considers enhancements to assure continued regulatory robustness.

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Following the setting up of the independent Listings Committees in October 2015, the establishment of RegCo will add to the safeguards in place to ensure high governance standards in the regulation and operation of SGX markets.

The establishment of RegCo will not add to the requirements of the current IPO listing process. This is consistent with ongoing efforts to rationalise regulatory functions performed by MAS and SGX.

MAS oversight

MAS will continue to directly regulate SGX in terms of its obligations as a listed company and market operator, as well as maintaining oversight of SGX’s regulatory responsibilities as performed by RegCo.

SGX will be directly accountable to MAS for ensuring the adequate provision of resources to RegCo in order for it to discharge its regulatory functions.

Loh Boon Chye, CEO of SGX, commented: “The new arrangement and the October 2015 introduction of the independent Listings Committees demonstrate our commitment to do all that we can within the SRO framework to address potential conflicts between our commercial objectives and our regulatory responsibilities. This will further enhance the robustness of our SRO framework”.

SGX expects to set up RegCo by the second half of 2017.

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