SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
Additional Standards • ESG disclosures – companies are increasingly expected to disclose ESG factors in line with global reporting frameworks, reflecting the growing impor - tance of sustainability in listing decisions. • Transparency and fairness – in line with global best practices, the SGX prioritises fairness and trans - parency in the listing process, ensuring that poten - tial investors have access to sufficient information before investing. 6.5 Order Handling Rules In Singapore, the MAS requires marketplaces and trading platforms to implement best execution pro - cedures, ensuring optimal outcomes for client orders based on factors like speed, price and execution like - lihood. Capital markets intermediaries must monitor compliance and disclose their best execution prac - tices to clients, ensuring transparency and informed decision-making. These rules aim to ensure fair trad - ing practices and protect market integrity. 6.6 Rise of Peer-to-Peer Trading Platforms Impact on Traditional Players The rise of peer-to-peer (P2P) trading platforms increases competition for traditional banks and finan - cial institutions. With features like payment versatility and global transfers, these platforms attract consum - ers seeking convenience and financial inclusion. This trend risks market share loss for traditional players, pushing them to innovate and adapt to new consumer preferences and technological advancements. P2P platforms reduce transaction costs and offer faster services, challenging banks’ lending and investment advisory roles. Impact on Fintech Players P2P platforms drive fintech innovation by simplify - ing borrowing processes, lowering interest rates and improving access to funds. This creates opportunities for fintechs to expand their market reach and enhance service efficiency. However, they face challenges in navigating regulatory frameworks, including licensing under the PSA and compliance with AML/CFT regula - tions.
Regulatory Challenges P2P trading platforms pose regulatory challenges con - cerning consumer protection, data privacy and market integrity. Regulators must address issues like fraud prevention, adequate disclosure and personal data protection under the PDPA. Ensuring market integrity and preventing manipulation, as outlined in the SFA, is essential. Regulatory oversight must also address cybersecurity risks and enforce due diligence, record- keeping and AML/CFT compliance. Balancing innovation and regulatory compliance is crucial for a secure and thriving P2P trading ecosys - tem. 6.7 Rules of Payment for Order Flow Rules Effective from 1 April 2023, the MAS has instituted a firm regulatory stance against the practice of Pay - ment for Order Flow (PFOF). As outlined in the Guide - lines to Notice SFA 04-N16 on Execution of Custom - ers’ Orders, the MAS explicitly prohibits brokers from receiving any form of payment or inducement in exchange for routing customer orders to specific market makers or trading venues. This prohibition is driven by concerns over potential conflicts of interest, where brokers might be incentivised to prioritise ven - ues based on the compensation received, rather than considering the best interests of their clients. Impact The regulatory ban on PFOF is strategically crafted to preserve the integrity of Singapore’s financial markets and reinforce the duty of brokers to achieve best exe - cution for their clients. Under the MAS’s framework, brokers are required to act in a manner that prioritises the most favourable outcomes for clients securing the best possible price, speed and execution quality for their orders. Historically, PFOF practices have raised concerns about market fairness, as brokers may have been inclined to direct orders to trading venues offering the highest payment, potentially at the expense of achiev - ing the best execution for clients. By eliminating this practice, the MAS aims to prevent external incentives from distorting brokers’ decision-making processes, ensuring that client interests remain paramount.
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