Transforming SGX Into Global Powerhouse
The Singapore Exchange, or SGX, operates on a very different model from the United States. In Singapore, investors own their shares directly through the Central Depository, or CDP. When a retail investor buys shares on SGX, those shares are entered into their own CDP account under their name. The company they invest in sees them as the legal shareholder. They receive annual reports, dividends, and voting rights directly.
The United States uses the Depository Trust and Clearing Corporation, or DTCC. DTCC holds almost all listed securities in its nominee company Cede and Co. That entity is the legal shareholder of record for every public company in America. Investors in the United States are only beneficial owners. They see their holdings on their broker statement, but on the company’s register their name never appears.
The Cost of the DTCC Model
The DTCC system has advantages for scale. It allows trillions of dollars of daily trades to clear and settle through one central nominee. But it creates problems for retail investors. When a broker fails, customers must rely on limited protection schemes such as SIPC. The shares are not in their names. They also lose out because brokers lend their shares to short sellers and keep the revenue. Retail investors gain nothing from this activity even though their assets generate profits for the financial industry.
Why SGX Is Safer for Investors
Singapore Exchange is better for retail investors. A shareholder who buys through SGX and holds in CDP is the legal owner. Even if a broker collapses, the shares remain untouched under the investor’s name. Reports, dividends, and votes come directly to them. In terms of fairness, SGX provides stronger protection and transparency than the American system.
The Perception Problem
The problem for the Singapore Exchange is not ownership security but excitement. SGX is not seen globally as a market with daily drama, massive liquidity, or fast-moving momentum stocks. Trading volumes on SGX remain modest compared to Wall Street. Global investors often describe the Singapore Stock Exchange as safe but dull. The United States has companies like Apple, Tesla, and meme stocks that move billions in hours. SGX lists steady companies that appeal to long term investors but do not generate frenzy. That perception keeps volumes low and limits SGX’s appeal.
A Hybrid Approach
There are solutions. One approach is a hybrid system, which already exists in many markets. Thailand lets investors choose between holding shares in their own names or leaving them under brokers in nominee accounts. The United Kingdom, through the CREST system, also allows direct ownership for those who want transparency and nominee accounts for those who prefer speed and flexibility. Hong Kong technically allows direct registration too, although in practice almost everyone stays under the HKSCC nominee.
What is less well known is that Singapore already offers a hybrid structure. The default for SGX trades through local brokers is direct registration in CDP, which is very retail friendly. Yet investors who use international or low-cost online brokers often end up with nominee accounts, where the broker is the legal holder and the investor is only a beneficial owner. This means SGX already has the foundation of a hybrid model, even if many investors are not aware of it.
Expanding and formalizing this hybrid choice could make SGX more competitive. Investors who want full rights and security could remain in CDP, while those who want lower costs, faster settlement, or lending opportunities could opt for nominee custody. This flexibility would allow SGX to preserve its investor protection advantage while giving global funds and traders the liquidity features, they expect.
Blockchain as a Game Changer
A stronger solution is to embrace technology. SGX could become the first exchange to launch a blockchain based CDP 2.0. Distributed ledger technology could record every shareholder directly in their own name while processing trades at global scale. Blockchain could allow SGX to keep the direct registration approach yet still settle trades worth trillions of dollars per day. That would give SGX the same efficiency as DTCC while maintaining fairness.
Blockchain could also unlock a new revenue stream. Instead of brokers lending shares without investor consent, a blockchain system could automate lending with transparency. Both the broker and the shareholder could share in the income. Retail investors would finally benefit from the lending market that today enriches brokers alone. This revenue sharing could make SGX more attractive, encourage higher trading activity, and close the gap with global giants.
The Future
The choice for SGX is clear. It can remain a safe but slow market, or it can use technology to leap ahead. By starting now, the exchange could build a hybrid system that keeps direct ownership for investors while scaling liquidity to Wall Street levels. The exchange already has the advantage of protecting retail investors. With blockchain, the exchange can add scale, efficiency, and excitement. That combination could transform SGX into a truly global financial powerhouse.
