He's on a crusade against corporate crime.
Singapore Business Review caught up with SGX Chief Regulatory Officer Tan Boon Gin at the recently-concluded Thomson Reuters ASEAN Regulatory Summit.
The local bourse's top commercial crime buster talked candidly about the difficulties of the job, the pitfalls of blindly following a western compliance system, and his desire to increase shareholder activism in the Singapore market.
1. As background please describe your role as Chief Regulatory Officer at the SGX.
We are the frontline securities regulator that admits, supervises and monitors listed companies, brokers and trading on the exchange. This is what attracted me to the job after 10 years of investigating securities offences at the Monetary Authority of Singapore and the Singapore Police Force – the opportunity to make a difference upstream by making early and timely intervention.
2. You mentioned the challenges of private enforcement and the less developed whistle blowing culture in Singapore compared with the US, why do you think that is the case?
I put it down to the difference in legal systems and shareholder profile. Class action law suits and the contingency fees have encouraged a more litigious society in the US. The US markets also have a higher proportion of institutional investors, who have the resources and the clout to push for change. In comparison, we have a relatively higher level of retail participation.
3. What are the pitfalls of simply following a western compliance system?
We cannot embrace a system wholesale when it is predicated on certain market attributes that are not present in our markets. We have to make the necessary adjustments, in terms of the checks and balances and access to information. If private enforcement is more challenging here because of the difference in legal and shareholder profile that I alluded to earlier, then we as the market regulator have to step up public enforcement. If retail participation is higher here, we have to make sure that market disclosures are meaningful to the retail investor.
4. The Singapore Exchange regulatory team keeps an important watch on trading activity – and with good reason, there have been some widely publicised errant examples over the years - but do you think there is a risk in hampering the natural competitive aggression of free market activity?
You hit the nail on the head by using the term “natural”. We intervene only to ensure that volumes and prices are driven by the natural forces of supply and demand. An aggressive trading strategy is entirely permissible, as long as it does not cross the line into creating a false market or an un-level playing field.
5. How do you hope to increase shareholder activism in Singapore?
We are engaging with fund managers and other stakeholders including the Securities Investors Association (Singapore) (SIAS) to see how this can be done. We see that SIAS has been active in terms of organising meetings between companies and shareholders and this is an encouraging trend. Part of the process also involves education and SGX is also working closely with SIAS and like-minded partners to raise the standard of both knowledge and awareness among investors. We are hopeful that investors will become better-informed of their rights and participate more actively, particularly at AGMs and EGMs.
6. How do you hope to increase the volume of institutional investors in Singapore?
Both retail and institutional investors are equally important to us. If you look at what we have done recently, we have increased the minimum IPO price, raised admission standards for companies seeking to list on the mainboard and introduced the independent listings committees to improve market structure and processes. We have also commenced a review of our companies’ compliance with the Code of Corporate Governance and issued detailed warnings of unusual trading activity and trends of concern to alert the market. We believe that all these will lead to a higher quality, more trusted and attractive market.
7. Do you have a take home message for readers regarding the direction of the Singaporean regulatory system?
There can be a misconception that because I am an ex-policeman I am keen on enforcement and favor a heavy touch. On the contrary, if you look at the measures we have been introducing recently, it is all about prevention and containment. Enforcement is always a necessary backstop, but it should be a tool of last resort. It is about finding the right touch and working together with market participants and stakeholders to promote growth, with integrity.
Tan was named as Chief Regulatory Officer in February 2015. He was previously a Justices’ Law Clerk at Singapore’s Supreme Court and a Deputy Public Prosecutor at the Attorney-General's Chambers, where he specialised in corruption and white-collar crime, before leaving to practise at Messrs Sullivan & Cromwell in New York.
He later served as a District Judge at Singapore’s Subordinate Courts before being seconded to the Monetary Authority of Singapore, where he held appointments as Director of the Enforcement Division, Director of the Corporate Finance Division and Executive Director of the Investment Intermediaries Department.
He joined SGX from the Commercial Affairs Department where he was previously the director.
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