SGX enhances oversight of listed issuers using AI

Rick Steves

The new capabilities will help automate the extraction of data that can then be used to compute certain indicators of financial risks.

Singapore Exchange Regulation (SGX RegCo), the exchange operator’s subsidiary that undertakes all frontline regulatory functions on behalf of SGX and its regulated subsidiaries, is introducing artificial intelligence and other RegTech solutions to enhance its oversight of listed issuers.

The indicators, based on SGX RegCo’s observations of indicative signs of possible financial distress or irregularities in listed companies, include the existence of long outstanding trade receivables; significant asset write-offs; low cash coverage ratio, and negative working capital.

SGX RegCo will soon add machine learning techniques and additional information sources with a view to improving predictive capabilities in these areas.

Tan Boon Gin, CEO of SGX RegCo, said: “Using artificial intelligence and other technology, SGX RegCo is adapting information from companies’ disclosures into structured data that can be analyzed and used easily and speedily. The automation of such processes directs regulatory resources to higher risk areas and enables us to be more targeted in our regulatory responses.

“We could, for example, issue disclosure queries taking into account these indicators, and where necessary, engage with the audit committee and external auditors. This together with issuers’ responses will provide transparency to investors on signs of possible financial distress or irregularities in listed companies.”

SGX has recently partnered with OneConnect Financial Technology to build an environmental, social, and governance (ESG) platform that simplifies the ESG disclosure processes of companies listed on the venue.

The increased focus on the ESG theme by the political sphere and the media has recently pushed the trading industry into adopting measures that facilitate the investment in companies more prone to preserve the environment and in line with societal values.

The platform will help companies listed on SGX to efficiently manage and make their sustainability disclosures for possible benchmarking more transparent. It also addresses common challenges faced by companies and investors such as lack of comparability, changing investors’ demand, as well as the evolving business landscape and regulations.

In March, SGX’s BidFX launched its Data and Analytics solution which will be added to the firm’s suite of offerings, including an EMS platform, risk and compliance modules, and transaction cost analysis (TCA).

The data and analytics service allows banks, hedge funds, and asset managers to better manage the collection and cloud storage of client-specific liquidity streams, as well as monitor composite rates across multiple FX products. BidFX’s tools give institutional players a comprehensive view of the pricing, market impact, and liquidity for every transaction.

The cloud-based provider of electronic FX trading solutions for institutions is a wholly-owned subsidiary of Singapore Exchange (SGX). The firm was first incubated within TradingScreen. After its initial launch within TS’s OEMS platform, Tradesmart, BidFX spun off in January 2017 into its own entity, whilst remaining available in the multi-asset solution.

In June 2020, TradingScreen announced that Singapore Exchange (SGX) had acquired its FX division, BidFX.

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