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SGX should provide market surveillance dashboard to investors, not just brokers

Michelle Teo Published on Fri, Oct 21, 2016 / 3:50 PM GMT+8

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SINGAPORE (Oct 21): Three years ago this month, a handful of high-flying stocks lost more than $8 billion in market value within a matter of days. Six months later, in April 2014, the Commercial Affairs Department started what it has called its biggest securities fraud investigation, which has yet to be concluded. Since then, the Singapore Exchange has stepped up its market surveillance activities, and even hauled up one trading representative for “creating a false market” with his trading strategies.

Recently, SGX also launched what it calls the Members’ Surveillance Dashboard, which is a report customised for each member brokerage containing statistics and information on activities that could be related to market misconduct. The Dashboard, released quarterly, includes details of alerts triggered by SGX’s surveillance system. SGX says these “complement” its existing real-time market surveillance, and provides its members with information they may not have. However, each member receives only information related to its own activities. SGX has said the information will not be made available to the public.

Presumably, SGX is expecting brokerage firms to use the information to watch for signals of dodgy conduct in their dealing rooms, and take pre-emptive measures to prevent another confidence-sapping penny stock crash from happening. This is unlikely. Trading representatives and the brokerage firms that house them are primarily interested in making money for themselves, not preventing another penny stock crash. And, SGX is mistaken if it believes that banks and brokerage firms are not already aware of what goes on in their dealing rooms.