SGX removes financial watch list, stops public trading queries in move to more market-driven regime (Straits Times)

Published Oct 29, 2025, 05:20 PM Updated Oct 30, 2025, 05:53 AM SINGAPORE – The Singapore Exchange (SGX) will no longer keep a financial watch list, and will engage privately with companies instead of issuing public trading queries as part of efforts to move towards a more transparent, disclosure-based regime. These new measures, among others, were announced by the Singapore Exchange Regulation (SGX RegCo) after the market closed on Oct 29, and come after the exchange’s regulatory arm first proposed adopting a less prescriptive regime in May. The new approach will enable companies tomake their own disclosure decisions as long as they fully disclose material information to investors. The measures are also based on recommendations by a review group set up by the Monetary Authority of Singapore in August 2024 to boost liquidity and raise investor interest in the Singapore stock market. For companies that want to list, SGX RegCo will retain key criteria to ensure that only issuers “with strong governance and financial health” are listed, it said. This means that unmodified audit opinions remain mandatory to ensure companies comply with financial reporting standards. Issuers must still confirm they have secured approvals and met legal requirements that could materially impact their operations. For other matters, SGX RegCo will also require clear disclosure of material issues to support investors in making informed decisions. More firms will find it easier to list, as SGX RegCo will lower the profit test threshold for new listings from $30 million to $10 million, aligning with other major exchanges. SGX RegCo said it recognises that pre-revenue companies with strong growth potential in emerging industries may be suitable for SGX mainboard listings, even if they may not meet traditional financial criteria due to the unique circumstances of their industries. “Their listing will widen the diversity of companies on the mainboard and broaden investor choice,” SGX RegCo said. Admission requirements have also been refined for certain industries, such as for pre-revenue life science companies. For such companies, their minimum operating record will be reduced from three years to two years, and they need to be primarily engaged in laboratory research and development of their identified products for at least one year, among other criteria. Azure Capital chief executive Terence Wong said adjusting the threshold is a positive move as there are many companies on the cusp of their next growth phase. “Hitting $30 million means they are already there, but there are companies that are under that threshold that are establishing themselves and that’s when they need funding the most,” he said. “This move makes it easier for them to come up (and list).” For companies that are already listed, SGX RegCo also announced measures to minimise market disruption and provide certainty to companies and investors. As part of these measures, trading suspensions will be considered only where there is clear evidence of going concern issues. Companies that are suspended from trading only because their ability to continue as a going concern is in doubt may apply to resume trading. The Straits Times understands that this will currently affect some 10 to 15 companies. SGX RegCo will also stop issuing public trading queries to companies. SGX RegCo chief executive Tan Boon Gin said: “Currently, our trading queries are quite general, and they’re not bespoke, so the feedback that we’ve been getting is that as an unintended consequence, they can have a chilling effect on the market.” For instance, when the share price goes up by a certain amount for a particular stock, investors might hold back from going in on the stock, because they anticipate that a public trading query might be issued, Mr Tan noted. “This actually impedes price discovery and means that our efforts on the enterprise side might not be maximised because there’s no proper price discovery.” But SGX RegCo will still issue “trade with caution” alerts if it feels that there is reason to believe the market is not fair, orderly or transparent. These alerts will be valid for two weeks, with new alerts issued as required. Mr Tan said such alerts will only be issued when SGX RegCo sees that there is evidence of misconduct that the market should be aware of. SGX RegCo will still issue disclosure queries to companies where it concerns material issues. Something is considered “material” if it will affect the decisions of investors in whether or not to trade in a company’s shares. Mr Tan said: “If it’s not material, then we will engage privately with the company so that we can tell the company how they can improve, but without having to go out publicly so that this will not create too much noise in the market and not create unnecessary alarm.” He added that SGX RegCo’s commitment to the market is that if something could affect investors’ decisions to trade, they will still be informed about it. Issuers must also continue to publicly disclose materially price-sensitive or trade-sensitive information, SGX RegCo said. Kennedys Law partner Robson Lee said SGX RegCo’s approach will be more nuanced going forward. “Invariably requiring issuers to announce trading queries from the exchange is a blunt regulatory instrument that creates unnecessary stress and pressure on issuers, when the objective of the query could merely be clarificatory in nature,” he said. He noted that disclosure compliance requirements under the listing rules and the law remain unchanged, and that all issuers and their directors are required to provide full, complete and prompt public disclosures. “This would be consistent with the spirit and objective of a disclosure-based regulatory regime, as opposed to a one-size-fits-all prescriptive regulatory regime,” he said. Finally, the financial watch list, which flags companies that have accumulated losses and low average daily market capitalisation, will be removed. Mr Tan said: “The purpose of the financial watch list wasn’t intended to punish companies. The intention was to motivate companies to turn themselves around, so they would not face delisting. “The unintended consequence was it might actually affect the company’s ability to turn around its business, because once a company gets put on the financial watch list, then people don’t want to deal with the company… so we may actually have made it more difficult for it to turn around the business.” Although there will no longer be a watch list, SGX RegCo still requires companies to announce if they have hit three years of losses, so investors are alerted to the company’s condition. “We also strongly encourage such issuers, where appropriate, to communicate their future plans and specific actions to improve financial performance,” SGX RegCo said. Mr Tan emphasised that the SGX RegCo remains committed to maintaining regulatory standards, both in the quality of listings and the level of surveillance over the market, to ensure that they continue to be robust. He also hopes that measures aimed at boosting market liquidity and vibrancy will have a positive effect on the regulatory landscape. “By deploying the monies through institutional investors, we are actually going to introduce a lot more discipline into our market, especially in the mid- to small-cap segment,” he said. “And this will be very good for the market, because this will push companies to do more for their shareholders, and we also think that this will raise standards overall.” Experts welcomed the moves and said the onus will be on companies to be responsible to stakeholders, while investors also need to be responsible for their investment decisions. Professor Lawrence Loh, director at the Centre for Governance and Sustainability at NUS Business School, noted that the shift is expected to put greater focus on the depth and rigour of company disclosures. “Market players, including analysts, must step up their surveillance to encourage quality disclosures beyond checking the boxes.” He noted that even a full merit-based regime may not be able to catch all possible matters of contention. “Ultimately, it’s about a delicate balancing act between enterprise and regulation with a fundamental objective that Singapore must stay a competitive and attractive place of equity issuance, but with the necessary guardrails and safeguards for investors,” he said. Article source: https://str.sg/gAZi