As it seeks to expand its ties with regional stock exchanges, Singapore's bourse is drafting tougher rules for listings in hopes of restoring a tarnished image.
Guidelines on suspension of listed companies are also being reviewed "to tighten rules (and) make enforcement more meaningful," according to an official statement.The exchange and its closely linked neighbor in Malaysia were rocked by the 1985 failure through fraud of Pan-Electric Industries Ltd., a property and shipping conglomerate. Trading was halted on both exchanges for three days and many brokers lost heavily.
Singapore prides itself on careful monitoring of the financial sector, and the scandal was viewed as a serious blot on its record.
Pan-El, which went under with debts of more than US$200 million, has since been struck off the Singapore exchange. Other related companies now suspended may also be de-listed, the exchange says.
There are a score or so of suspended companies of all sorts still carried on the exchange board out of a total of about 350 issues.
They are to be reviewed every three to six months, but officials gave no immediate indication of what criteria they will apply in deciding whether to de-list.
Singapore hopes to develop "a more regional and international outlook" by closer links with other exchanges, said Tan Chok Kian, the exchange's chairman. He specifically mentioned Japan, Hong Kong, Taiwan and South Korea.
"We are all set to develop a more regional and international outlook for the exchange to widen its influence and play a more significant role in the region," he said.
One element behind this move may be fears that Malaysia will break away
from Singapore in the wake of the Pan-El debacle.
Singapore is also planning to relax rules that limit foreign participation in local brokerages to 49 percent.
The idea is to encourage more foreign investors and add to the number of overseas companies listed, Mr. Tan said, which should raise standards of research and client services.
A joint-venture stake of 70 percent will be permitted in an initial maximum of eight firms if certain conditions are met, chiefly that at least half the total business in the first three years is from outside Singapore.
A larger stake may be granted in certain circumstances, Mr. Tan said, and the number of firms allowed to have majority foreign control will probably be raised if the experiment proves successful.
Other conditions stipulate that any agreement between a Singapore and a foreign firm giving the latter more than 49 percent must be approved in advance by the Stock Exchange of Singapore.
Foreign brokers taking part in a joint venture will not be allowed to operate a separate bro kerage without similar approval.
Citibank is one of a number of overseas firms to have expressed interest in a joint brokerage.