Clarifying SGX's clarification
IN RESPONSE to the tumultuous events of the past three weeks
involving the speculative trio of stocks Asiasons, Blumont and LionGold,
the Singapore Exchange (SGX) last Friday issued a detailed
clarification to correct what it believes are misconceptions about its
role as frontline market regulator.
Clearly intended to be the final word on the subject, SGX's explanations are useful as they address gaps in the public's understanding of the way regulatory matters are handled and how the exchange views its role. Last Friday's release should be compulsory reading for all parties interested in regulatory matters, how discipline is maintained in daily trading, and overall governance.
From a close reading of SGX's release, the first point to note is that the exchange's powers are limited almost wholly to issuing warning signals to the market if trading takes an unusual turn. These warnings range in strength, starting with a query - the first signal that something may be amiss. Then it progresses to designation (which occurs if there may be possible manipulation and/or excessive speculation); and ends with an exchange-driven suspension (when the exchange thinks the market is not orderly, informed or fair).
A temporary suspension could, of course, come ahead of designation as shown in the case of the speculative trio. But the point that should be stressed is that SGX's primary regulatory role in daily trading - apart from enforcing its listing rules - is to sound warnings.
Clearly intended to be the final word on the subject, SGX's explanations are useful as they address gaps in the public's understanding of the way regulatory matters are handled and how the exchange views its role. Last Friday's release should be compulsory reading for all parties interested in regulatory matters, how discipline is maintained in daily trading, and overall governance.
From a close reading of SGX's release, the first point to note is that the exchange's powers are limited almost wholly to issuing warning signals to the market if trading takes an unusual turn. These warnings range in strength, starting with a query - the first signal that something may be amiss. Then it progresses to designation (which occurs if there may be possible manipulation and/or excessive speculation); and ends with an exchange-driven suspension (when the exchange thinks the market is not orderly, informed or fair).
A temporary suspension could, of course, come ahead of designation as shown in the case of the speculative trio. But the point that should be stressed is that SGX's primary regulatory role in daily trading - apart from enforcing its listing rules - is to sound warnings.
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