Singapore’s Stock Market
The front page of the Straits Times on Tuesday (22nd July 2025) led with this article of the government injecting $1.1 billion into our stock market. This is a necessary step for any market support. Additionally, MAS mentioned that they may consider strengthening investor protection by enhancing existing legal provisions that enable investors to ride on a court action or civil penalty to seek compensation. This will be facilitated by existing organisations such as the Securities Investors Association Singapore (SIAS).
Let me be blunt: while I wish MAS well in their goals, I do not believe these measures (as proposed) will succeed in revitalising the stock market.
I believe that to rely on the existing set-ups (SIAS, a unitary SGX, Catalist) that have got us to this moribund Singapore stock market, is like pouring new wine into old skins - we will waste our efforts.
First, we need to ask ourselves: what is a domestic stock market for? - Is it for chasing listing numbers from overseas markets like China to list here? Or is it to incubate and grow local companies?
I believe we need to reset our ideas of what the stock market should be for. In my view, a stock market’s foundational goal should be to incubate and grow local companies. It’s a good-to-have to have overseas listings, but it cannot be the primary goal. In my view, the government, over the last 20 years, has lost sight of that the developmental purpose of a stock exchange.
At the same time, I do not think MAS is being entirely fair to SGX when it is enforcing a reorientation to local equities. I was a professional trader for 6 years in buy-side finance, trading global macro across many asset classes. I know SGX has developed great strengths in OTC FX, commodity derivatives such as onshore iron-ore futures. As a for-profit entity, it has fiduciary duties to seek out these opportunities, and it has done so well. I think it is a well-run derivatives exchange.
So that is why I believe that we will need new institutions (or “new skins”) to handle the responsibility of creating a vibrant Singapore stock market.
Firstly, we should set up a new non-profit stock exchange to replace SGX’s stock market function, and allow SGX to focus on its profitable derivatives business. This reorganisation has been done before, in December 1999, when SGX was formed as a holding company out of Singapore International Monetary Exchange (SIMEX) and Stock Exchange of Singapore (SES).
This non-profit exchange should have its core goal the “development and growth of local companies”.
Second, I believe that there should be a new independent investor-protection centre, funded by a small levy on each trade. This will fund a “corporate governance SWAT team”, an in-house team of lawyers to avoid conflicts of interest, which can initiate class-action suits on behalf of aggrieved investors, and has its own legal costs capped by law when suing large corporations, giving it the muscle to challenge powerful entities. The law should be amended to allow this state of affairs. This will restore confidence and erase the original sin of Singapore’s poor listing quality of the China “S-Chips” from 2000s-2010s, on which many domestic investors in Singapore lost substantial money.
Third, MAS should set up an independent securities regulator instead of currently, where it lets SGX RegCo (a wholly-owned subsidiary of SGX) do all regulatory functions.
Fourth, this new non-profit stock exchange (besides its mainboard) should include a replacement for the sponsor-based Catalist board (where 86% of stocks trade below their Day 1 closing price!) with dedicated incubation and OTC-style boards that have a clear developmental mandate. By creating a venue for companies in an earlier development stage here, we can also cut down the red-tape for some classes of companies - such as administratively complex disclosure rules, requiring a director’s history going back 10 or even 20 years.