SGX RegCo Deploys AI & Machine Learning to Detect Risk

SGX RegCo is adapting information from companies’ disclosures into structured data that can be more quickly analysed.

SGX RegCo (Singapore Exchange Regulation) has announced it is introducing artificial intelligence (AI) and other regtech solutions to enhance its oversight of listed issuers.

“Using artificial intelligence and other technology, SGX RegCo is adapting information from companies’ disclosures into structured data that can be analysed and used easily and speedily,” said Boon Gin Tan, CEO of SGX RegCo. “The automation of such processes directs regulatory resources to higher risk areas and enables us to be more targeted in our regulatory responses.”

The solutions will help automate the extraction of data that can then be used to compute certain indicators of financial risks.

The indicators are based on SGX RegCo’s observations of indicative signs of possible financial distress or irregularities in listed companies – such as the existence of long outstanding trade receivables, significant asset write-offs, low cash coverage ratios, and negative working capital.

“We could, for example, issue disclosure queries taking into account these indicators, and where necessary, engage with the audit committee and external auditors.,” Tan said. “This together with issuers’ responses will provide transparency to investors on signs of possible financial distress or irregularities in listed companies.”

SGX RegCo says it is also expanding the solutions to include machine learning techniques and additional information sources with a view to improving predictive capabilities.

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