Murali Pillai
2 min readMay 11, 2024

Recently, I read an FT article entitled “The hidden power of index providers” dated 9 April 2024 which drew attention to the fact that not all decisions made by index providers are passive. It made the point that such decisions shape capital allocation. I therefore raised the prospect of closer regulation of index providers in Singapore. In response, DPM Lawrence Wong stated that there are adequate regulatory measures put in place to ensure transparency in protection of investors interests. My parliamentary question and DPM’’s response are set out below.

— — — — — — — — — — — — — — — — — — — — — — -

Mr Murali Pillai asked the Prime Minister whether MAS intends to regulate index providers of index-linked funds traded in Singapore with respect to discretionary decisions by these providers that may impact capital allocation by the said funds, particularly in stocks and bonds.

Mr Lawrence Wong (for the Prime Minister): The financial benchmarks regime under the Securities and Futures Act 2001 (“SFA”) governs the activities relating to the setting of financial benchmarks, which include equity and bond indices. It is an offence for any person to manipulate an index administered in Singapore, or for a person in Singapore to manipulate an index that is administered elsewhere.

Index-linked funds that are offered to retail investors in Singapore are required to comply with strict regulatory and disclosure requirements. The underlying index must be representative of the market or sector which it aims to replicate. Key information on the index composition, methodology, as well as significant changes to the index must be accessible to investors to enable them to continuously evaluate the representativeness and objectivity of the underlying index.

In addition, fund managers using indices for index-linked funds are required by regulation to conduct due diligence on index providers, evaluate suitability and risks associated with the use of indices, and ensure that risks, including potential conflicts of interest, are properly addressed.

Where benchmarks are assessed to be systemically-important, MAS will designate and regulate them to ensure that they have proper governance processes and accountability mechanisms. MAS had designated the Singapore Interbank Offered Rate (SIBOR) as a benchmark that is systemically important for Singapore as it was widely referenced by banks to set interest rates for residential property and commercial loans in Singapore. In the case of index-linked funds, the two largest funds account for only 3% and 1% of Singapore-constituted retail funds respectively. Given this, MAS has not assessed and designated any such indices to be systemically-important.

In summary, taken together, the overall framework safeguards the credibility of financial benchmarks in Singapore, as well as investors’ interest in index-linked funds.



Murali Pillai

Member of Parliament, Bukit Batok SMC, Advisor to Bukit Batok SMC GROs.