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Singapore Exchange unveils plans to encourage alternative fund listings

The Singapore Exchange is inviting public comment on proposed changes to its securities listing rules that would widen the range of companies and p

The Singapore Exchange is inviting public comment on proposed changes to its securities listing rules that would widen the range of companies and product types listed on the exchange, including extending the range of alternative funds listed in Singapore. The rule changes will also facilitate better disclosure and increased transparency for the benefit of investors, the exchange says.

The changes propose that private equity funds and so-called blind pool funds that have not identified specific investments but have specified investment strategies should be eligible for listing on the exchange, in order to bring a wider selection of product offerings to the market. New classes of non-tradable funds would be subjected to current hedge fund listing rules.

The Singapore Exchange says it has noted that investment vehicles that traditionally have been available only to institutional and wholesale investors have emerged recently in international public capital markets. Following research on requirements in other jurisdictions, it proposes amendment of the rules to facilitate the listing of these vehicles and of its requirements for investment funds to keep pace with market developments.

The planned amendments remove the current currency demarcation and minimum asset size imposed on investment funds. They also introduce the concepts of public securities funds (which invest predominately in listed securities), private securities funds (which invest predominantly in unlisted securities) and blind pool funds.

The exchange is proposing to introduce specific rules for private securities funds and blind pool funds that take into account the particular features of these funds, addressing issues such as the valuation of assets for private securities funds, compensation provisions for investment managers of private securities funds, and safeguards placed on the management of blind pool funds.

Other amendments aim to formalise requirements regarding the experience and integrity of investment managers, their controlling shareholders, directors and management, the composition of funds’ boards of directors and audit committees, and the resolution of conflicts of interest, as well as introducing ongoing listing obligations for funds.

The exchange currently imposes a minimum requirement of 500 public shareholders for the listing of investment funds. It is seeking feedback on whether 500 public shareholders is a reasonable threshold given an investment fund’s business model and potential investor pool, or whether a lower threshold should be introduced.

At present hedge funds may be listed without the trading of units on the exchange. The organisation is asking for the views of market participants on applying these rules to all funds that seek a listing without the trading of units on the exchange, designated non-tradable funds.

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