MAS and SGX propose measures to strengthen the securities market

‘The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) today released a joint consultation paper setting out proposals to strengthen the securities market in Singapore.
 
The proposals follow an extensive review by MAS and SGX of the securities market in Singapore. The review concluded that while the securities market remains sound, there were three areas for improvement:
• promoting orderly trading and responsible investing;
• improving the transparency of market intervention measures; and
• strengthening the process for admitting new listings and enforcing against listing rule breaches.’
 
It is timely that MAS and SGX finally find a need to take a look at the health of the stock exchange and are inviting feedbacks on what needs to be done to make the stock market a more resilient and sustainable institution for the long haul. The objectives of this exercise are posted above, copied from SGX.
 
For all intent and purpose, this is a move in the right direction, a sign that things are not doing well and to take a serious look at the problems before it falls apart. On the other hand, this exercise tells another depressing story. The proposed changes and the need to ask the layman public on such serious and technical issues that require the technical knowledge of experts and thinking people in the industry says that MAS and SGX do not know what is wrong with the stock market. It is doing fine, just a little cosmetic changes and it will look pretty again.
 
Or, it may be that they know what is wrong but are turning the other way, not wanting to face the uncomfortable truth and wishing that everything is fine. There is no elephant in the classroom.
 
The public, even the stakeholders, if they are not willing to put on their thinking caps to look seriously into the problems that led to the current pathetic state of the stock broking industry would at best scratch the surface of a systemic problem and would make a few cursory or casual remarks and suggestions and thinking the problems will go away. From my experience, many are still totally ignorant of what is happening and the real causes of the failing market.
 
The stock market is in the critically ill stage and needs immediate resuscitation if it is not to collapse into a coma. And the proposals made by MAS and SGX are not encouraging. It is like a patient dying of syphilis and the doctors are recommending treatments for measles, for acne, and for insect bites. Unless MAS and SGX are serious to want to save the stock market from its certain demise, this exercise would be a waste of effort and time.
 
To be able to come up with effective measures to save the stock market, it is paramount that they know what is wrong with the market. What are the causes that are contributing to a market in distress. If they are chasing after the shadows, what good would come out of it? If they don’t even know what is wrong with the market, what is there to do to right the wrongs?
 
Another very important factor that can make this exercise real, if real solutions and tough measures are to be taken to revive the market, is professional expertise. You need people who know what they are saying, to know what is wrong and what needs to be done, and most of all, have the credentials and authority to tell the SGX that these things must change. Recommendations made by the public, or the stakeholders, could simply be ‘pooh pooh’ away by the SGX for obvious reasons and by the authority vested in them as the incumbent officials. They would flash their badge of professionalism and expertise and simply claimed that they know best and what they are doing are the best, and nothing meaningful will be accepted. Who is in a better position to go against the gods?
 
What can the other stakeholders do when authority and power are vested in the office bearers at SGX to make them change a flawed system?
The MAS should engage foreign experts that have the knowledge and authority to tell the SGX what needs to be done to save the industry. Here we are talking about real talents, people like Paul Volcker and the critics of the NYSE, of how the NYSE has been turned into a scam, a casino instead of a stock exchange. The western model stock markets, including SGX, are no longer stock markets for investment but for pure gambling, not even for speculations.
 
Now who is saying that we should not encourage a gambling mentality in the stock market when the stock market has been redesigned into a casino? There is no elephant in the classroom if one does not want to look at it.
 
This is just my general comments on this exercise. I will submit my views on what is wrong and what needs to change, and I will submit it to MAS and SGX even knowing that it would likely end up in the thrash bin. No one, not even the broking houses, would be in any position to make serious and important changes to the right the wrongs in the stock market if the authority in MAS and SGX do not want to see the wrongs and do not want to make changes to a system they think is doing fine.
 
For real changes to be effected, you need the pros that could speak to the MAS and SGX on equal terms and have the clout and confidence to make them do the right changes against their objections. The govt must spend this money if they do not want to see the worse from happening.
 
The few proposals put up by MAS/SGX would have little impact on the general health of the stock market, and some would actually hasten its demise if implemented. It just shows the level of thinking and understanding of what is happening to the stock market. They are refusing to remove the blinkers and are trapped in an old mindset programmed by the so called experts, to see and say the right things that are really frivolous.