We conduct ongoing surveillance of market practices and undertake rigorous enforcement actions to ensure compliance. Disclosure The SFA requires exchanges to develop rules for reliable and unhindered price formation and discovery. First, disclosure must be ongoing. Post-listing, material information likely to affect market prices must be disseminated in a timely and organised manner. For example, a company that makes an acquisition which is likely to have a material impact on its share price must immediately announce it on the website of the Singapore Exchange. Second, disclosure must be accessible to all. Listed companies are prohibited from disclosing material information on an individual or selective basis. These disclosure requirements complement Singapore’s statutory provisions on market manipulation and insider trading. Enforcement …. and its limitations Issuers and investors alike must have confidence that the ground rules are adhered to when they transact in our markets. Constant surveillance and strict enforcement are therefore critical. MAS takes a serious view of any false statement or omission of material information that misleads the market. We will not hesitate to impose stiff penalties on issuers who have made misleading statements in initial public offerings, or IPOs. But no regulator can totally prevent fraud or misconduct. Take for instance our experience with S-chips, or Chinese companies listed on the SGX. Many of them are reputable companies and add breadth to our equity capital market. But some of them are not. Since 2006, accounting irregularities or outright frauds have been discovered in 14 such companies listed on the SGX.
This has enhanced our understanding of the commercial environment and invigorated our organisation. Just as MAS has gained from such insider insight, industry too needs its share of talent. Through the mixing of talent between the public and private sectors, industry will also come to understand the intent and thinking behind MAS’ policies and actions. Over time, this will lead to a healthier and more constructive relationship where MAS and industry together work toward developing Singapore as a world-class financial centre. Enhance market discipline Fourth, we need to continue to enhance market discipline. The easy part is to establish and enforce the right rules for disclosure and corporate governance. Getting companies to internalise and abide by the spirit of tighter rules will take longer, though our standards of disclosure are already quite good compared to other countries. The most difficult part will  BIS Review 62/2002  7  be enhancing consumer education and awareness, without which, as I noted earlier, disclosure and caveat emptor cannot work. We do not need to convert the entire population into Chartered Financial Analysts. But we must help the public to understand basic finance and investment concepts, and to make effective use of the information that is available. They also need to understand that investing is for the long term and should be based on fundamental analysis. This requires a collective effort on the part of MAS, industry bodies and consumer groups.