China Sky Chemical Fibre

[Qiaofeng]

most depository agents and trustees would offer SBL service with the consent of the share depositors, just like banks offer loan service using depositors' money. I don't see any wrongdoings with CDP offering such service.

Consider this.....
SGX censures CSCF ( that fictitious China Sea Chemical Fibre which we alluded to earlier).
It makes an announcment that is negative to CSCF (assume not suspended).
The next day a shortist (hedgefund say) borrows a big chunk out of the CDP thru the SBL facility and shorts CSCF shares and makes a big pile.

So we have one arm of SGX ( regulatory) acting in a way that could allow another arm of SGX (fiduciary/CDP) to earn fees from it.

In effect, CSCF shareholders get screwed becos they had allowed their shares thru CDP to be loaned (i.e. CDP has acted in a way contradictory to the legal duty to protect the interests of the beneficiary).

Debatable on intent and SGX would probably cite "Chinese walls". But why allow such potential conflicts of interest from arising?

Btw that is how I felt, when I consented to SBL and saw the massive shorting of many blue chips during the last GFC----- why is SGX profitting on one hand and yet appearing to be concerned by publishing the list of Buy-in of securities daily------ hence, I cancelled the consent to SBL.

Shorting/hedging serves a useful purpose and is the very reason for undervalued shares (a gift to value investors!!)----- but remember the topic is on SGX and the potential conflicts of interest.