Equities Market Review Group announces first set of measures to strengthen competitiveness of Singapore’s equities market: Allen & Gledhill

25 February 2025

On 21 February 2025, the Equities Market Review Group (“Review Group”) announced its first set of measures to strengthen the competitiveness of Singapore’s equities market. These measures encompass demand initiatives to increase investor interest and deepen liquidity in Singapore’s equities market, paired with supply initiatives to facilitate the pipeline of quality listings in Singapore. The demand and supply initiatives will be complemented with regulatory initiatives to move decisively towards a more-disclosure-based listing regime.

Taken together, the Review Group’s measures are targeted towards cultivating more quality initial public offerings to inject new investor interest, a greater range of Singapore-focused funds to enhance institutional vibrancy and shareholder engagement for listed companies, and broader investor participation beyond benchmark index counters. The approach seeks to enhance the competitiveness of Singapore’s equities market ecosystem to enable the long-term sustainable growth of the equities market.

Background

The Monetary Authority of Singapore (“MAS”) established the Review Group on 2 August 2024 to recommend measures to enhance the development of Singapore’s equities market. Since its formation, the Review Group has held extensive consultations with industry stakeholders. In its report, the Review Group said that Singapore can serve as a trusted and well-functioning market venue for small and mid-size enterprises in Singapore and in the region to access financing that will support their next stage of growth. While many Asian growth companies aspire to list in the US, the performance of the US markets has been largely driven by the performance of its mega-caps. Smaller and medium-sized companies have often been overshadowed by larger companies, and have struggled to sustain investor interest post-listing. Singapore can offer a listings venue for enterprises with a Singapore and regional focus, and allow them to better stand out here given increased brand and investor familiarity.

Measures to increase investor interest (Demand)

The Review Group recommends demand-side initiatives to deepen trading liquidity and strengthen capabilities in the local fund management and equity research ecosystem.

New S$5 billion programme to strengthen local fund management ecosystem

MAS and the Financial Sector Development Fund will launch a S$5 billion Equity Market Development Programme (“EQDP”) to strengthen the local fund management ecosystem for Singapore equities. Under this programme, MAS will invest with selected fund managers with capabilities to implement investment mandates with a strong focus on Singapore stocks. These strategies should be actively managed, invest in a range of companies and not just index component stocks, and over time draw in investments from other investors. MAS will start the process of evaluating eligible fund managers and strategies over the next few months.

Tax incentives for fund managers investing substantially in Singapore-listed equities

As announced by the Prime Minister in Budget 2025, a tax exemption will be introduced for qualifying income from fund management and investment advisory activities related to funds that invest substantially in Singapore-listed equities. This will complement the EQDP and signal support for fund managers to launch and actively distribute funds that invest substantially in Singapore’s equities market.

Adjustment to Global Investor Programme to support more capital inflows into Singapore-listed equities

Currently, under the Global Investor Programme (“GIP”), applicants investing under the family office option have to establish a single family office with assets under management of at least S$200 million, of which at least S$50 million must be deployed into qualifying investment categories consisting of listed equities/REITS/business trusts, qualifying debt securities, Singapore-distributed funds, and non-listed Singapore-based operating companies. Going forward, for new GIP family office applicants, the qualifying investment categories will be narrowed to equities listed on approved Singapore exchanges.

Enhancements to research ecosystem

The Review Group recommends expanding the Research Development Grant Scheme under MAS’ Grant for Equity Market Singapore (GEMS) to build a ready investor base, sharpen focus on mid- and small-cap enterprises, and broaden research dissemination including via new media channels. Further details will be released around mid-2025.

Measures to improve attractiveness to quality listings (Supply)

The Review Group recommends supply-side initiatives to attract companies with operations in Singapore and fund managers to tap Singapore’s equities market for their capital raising.

Tax incentives to attract corporate and fund manager listings in Singapore

As announced by the Prime Minister in Budget 2025, the Government has accepted the Review Group’s recommendation to introduce tax incentives to attract growth companies and fund managers to list in Singapore. These include the following:

20% corporate income tax rebate for new primary listings and 10% tax rebate for new secondary listings (with share issuance). This complements the existing GEMS Listing Grant Scheme in defraying part of enterprises’ listing costs.
Enhanced 5% concessionary tax rate on qualifying income for new fund manager listings in Singapore. To qualify, an eligible fund manager must distribute a portion of its profits as dividends.

Financing support to strengthen growth of companies

The Government will continue to enhance support for the development of local enterprises that will provide a pipeline of potential companies for listing. This includes the new investment schemes announced at Budget 2025, which are administered by the Ministry of Trade and Industry and Enterprise Singapore.

Measures to streamline regulatory framework and strengthen investor confidence

The Review Group recommends adopting a more pro-enterprise regulatory stance, alongside other measures to strengthen investor confidence. The regulatory measures will move Singapore decisively towards a more disclosure-based regime. While upholding sound international standards, Singapore’s listing process will be significantly more efficient and streamlined than at present and will compare favourably with leading financial hubs in the world. Regulation will be more focused and facilitative of listings, and high standards of corporate governance and robust enforcement will be upheld to maintain investor confidence. In addition, key ecosystem players - such as issue managers who conduct due diligence, accounting professionals who conduct financial audits, as well as research analysts who scrutinise disclosures - must play their part so that investors can make their investment choices with adequate and reliable disclosures.

The Review Group recommends the following measures:

Consolidate listing suitability and prospectus disclosures review functions in Singapore Exchange Regulation (“SGX RegCo”): This will provide prospective issuers with greater clarity on the listing process and timeline, as they only need to engage with one regulator going forward.
Reduce scope for merit-based judgement when admitting new listings, by streamlining SGX RegCo’s qualitative admission criteria: Instead of taking a prescriptive approach to how issuers mitigate any risks prior to listing, SGX RegCo will focus on ensuring that the disclosure of material issues is sufficient for informed decision-making by investors.
Streamline prospectus requirements and listing processes: All major parts of the prospectus disclosure requirements - including on financial information, interested person transactions, and conflicts of interest - will be streamlined while continuing to adhere to international standards. Core disclosure requirements will be retained, with emphasis on clear disclosure of the most relevant and material information to investors. With the streamlining, issuers can expect a typical listing review process to take six to eight weeks. MAS will also simplify requirements to allow issuers seeking secondary listings in Singapore to do so using the prospectus from their primary listings on established exchanges with minimal adaptations.
Adopt a more targeted approach to post-listing queries, alerts, and trading suspensions: As public queries and alerts can have unintended and disruptive effects on the trading of issuers’ shares, a more targeted approach to such interventions will allow SGX RegCo to strike a better balance in facilitating market discipline and achieving investor protection. SGX RegCo will also consult on a proposal to remove the financial “Watch-List”.

MAS and SGX RegCo will issue detailed consultations on these proposals by mid-2025.

Future developments

In its next phase of work, to be completed by end-2025, the Review Group will consider other proposals beyond the measures announced on 21 February 2025. These include:

introducing programmes to uplift listed companies’ shareholder engagement capabilities and sharpen their focus on shareholder value;
attracting retail liquidity through market structure changes such as reducing board lot sizes;
strengthening investor protection through enhancing investor recourse avenues;
improving post-trade custody efficiency; and
developing cross-border partnerships.