In a bid to enhance governance and reduce the risk of conflicts, the Singapore Exchange (SGX) is hiving off its frontline regulatory operations into a separate self-regulatory organization (SRO).
The move, which was announced on Monday, is intended to improve its governance by explicitly separating its regulatory functions from its commercial operating activities. The new organization, which is expected to launch by the second half of 2017, will be governed by a separate board with a majority of independent directors to ensure its independence from the exchange.
The move to an SRO model follows the SGX setting up independent listings committees last year. Establishing an independent SRO “will add to the safeguards in place to ensure high governance standards in the regulation and operation of SGX markets,” the exchange says in a statement.
“The decision to house our entire regulation unit in a separate subsidiary with its own governance structure was made after a long and careful deliberation,” adds Loh Boon Chye, CEO of SGX. “The new arrangement and the … introduction of the independent listings committees demonstrate our commitment to do all that we can within the SRO framework to address potential conflicts between our commercial objectives and our regulatory responsibilities. This will further enhance the robustness of our SRO framework.”
The SGX’s move “is an important step in strengthening the safeguards to manage potential conflicts of interest between SGX’s commercial and regulatory roles,” the Monetary Authority of Singapore says.