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Singapore's proposed changes to its secondary listings framework could help strengthen its position as a world financial centre, says BNY Mellon

The SGX describes itself as the gateway to Asia and SDRs and GDRs could provide the keys

The Singapore Exchange's (SGX) recently announced proposals for a new regulatory framework could make it easier for established global companies from certain developed markets to seek a secondary listing in Singapore if implemented. This move could be the key which unlocks the door to attracting an even greater number of overseas issuers which, in turn, could draw investors, improve market liquidity and strengthen Singapore's status as a world leading financial centre, says BNY Mellon.

The SGX proposal puts forward the possibility of two tiers of regulatory oversight for secondary listings, depending on each company's home market. For companies with a primary listing or substantial exposure to 23 developed markets, SGX will no longer impose additional continuing listing obligations. That list of developed markets will be based on classifications by index operators MSCI and FTSE.

Existing listed companies from these 23 markets, which are already operating under additional obligations imposed by the SGX, will be freed from those extra compliance requirements three months after the proposed changes take place. The three months are meant to give investors an adjustment period.

"Over 40% of companies listed on SGX today are from overseas and there are 33 companies with a secondary listing," notes Neil Atkinson, Head of BNY Mellon's depositary receipts business in Asia-Pacific. "Should SGX's proposals go ahead, we expect this number to increase as it makes Singapore a much more compelling proposition for the increasing number of foreign companies gazing east and eyeing access to the growing pools of available capital and business prospects in the region."

"Singapore is fast approaching US$2 trillion in assets under management and lays claim to be the largest institutional investor base in Asia.  This is a compelling draw for foreign companies seeking opportunities to access capital and expand their shareholder base in Asia," continued Atkinson.

"SGX provides for a number of avenues for DR or potential DR issuers.  Singapore depositary receipts (SDRs) and global depositary receipts (GDRs) are ideal solutions for overseas issuers to access SGX.  DRs can assist overseas companies listing in Singapore if their home jurisdiction prevents them from cross listing their existing shares in more than one country, or prevents them listing their shares overseas at all, for example, India."

SGX has stated that it hopes to implement the new framework by the fourth quarter of this year.