Business Times article on SGX revamped new board :

WHILE the Singapore Exchange (SGX) is on track to make announcements on its new second board, there are concerns that some outfits may find it hard to list if sponsorship is restricted to just a few players.

In May, SGX announced plans to overhaul its junior board Sesdaq to attract small, fast-growing firms from overseas to list here.It aims to transform Sesdaq into a market where professional financial advisers, known as sponsors, will take a key role in the listing process. The sponsors who face strict admission rules will supervise listing aspirants who will not need to formally demonstrate a business track record, SGX said.

Sources say that SGX is targeting the local banks and some of the larger corporate finance outfits such as CIMB-GK Securities to be on the first list of approved sponsors.'There won't be so many players in the first batch. The exchange would prefer to have the more established players first,' a source said. The question is whether this could put the brakes on the growth of the second board. With this approach, some fear that there may not be enough sponsors to meet market needs and that fees will be prohibitively high for smaller companies.

On top of having enough sponsors to handle prospective listings on the junior board, some 159 listings on Sesdaq also need sponsors.

While sources say local banks are keen on sponsoring their clients whom they are already familiar with, they may not embrace non-clients because the effort required to do due diligence checks on them is not compensated by the low sponsorship fees.

According to the proposed rules, sponsors have to be at hand to advise on all listing and corporate governance matters. They also have to monitor their issuers' trading and be alert to any leakage of price-sensitive information.'We will be keen to sponsor our clients because we already know them,' a source from a local bank said. 'We want to grow with them, and sponsoring them is part of the total package of services we offer so that we don't lose them. But for companies who are not our clients, we will be more selective.'

Responding to queries, SGX told BT that it is in the final stage of preparation for the rollout of the new board and that details are expected to be announced before the end of the year.

Sources from smaller corporate finance houses want to be included in the action and say that they offer a better deal than the banks who charge higher fees. 'The banks will want to be compensated for taking on the higher risks and work that comes with sponsorship, but if the costs are too high, then it does not make sense to go for a listing on a growth board,' a source said.

At London's growth board, Alternative Investment Market (AIM), firms typically pay 3-5 per cent of the value of the issue in appointing a nominated adviser, or Nomad.

According to the London Stock Exchange website, there are about 70 Nomads.
There are about 30 corporate finance outfits here. The question is how many of them will be allowed to play sponsor.