THE STRIFE OVER PAN EL
The collapse of Pan Electric Industries (Pan El) spells the end of a long and profitable partnership between the Singapore and Malaysian stock exchanges. Despite being distinct and separate from each other, they've been viewed by foreign investors almost as one. The collapse of Pan El has brought to a head the different regulatory policies of the two governments.
For Singapore, it means the end of self-regulation, as the market evolves towards a system of even more official intervention in the securities industry. Ironically, before the closure of the market, the brokers and other segments of the financial community were working towards a more liberal market in which banks and other investors would be allowed to buy into brokerage firms.
Events have been speeded up since the monetary authorities took control of the market. This year foreign as well as local financial institutions will be allowed to buy total control of a Singapore broker. The necessary enabling legislation to bring this about is likely to be introduced in the first quarter of 1986. The objective will be to push brokers towards building up their capital base.
Until the market's closure in early December 1985, few brokerage firms saw the necessity to forge links with outside shareholders.