Singaporean Marketplace Investor Q&A
Through the transition period, we understood that there were some specific questions that our investor community wanted clarity about. Below is an overview of some of the questions, with detailed responses including reference to relevant legislation. If there are additional questions, please do feel free to contact the team for us to respond directly to your query.
Q: Please explain the rationale for moving the trading from Estonian to Singapore marketplace.
Until now Funderbeam’s “trading” service relied on Estonian and European regulatory exemptions. It helped us to launch the initial services and supported us in understanding how and if the business model works. We got the proof of concept, but unfortunately regulatory exemptions do not provide enough security to scale.
Since 2017 Funderbeam has carried out significant research and identified Singapore’s regulatory environment as ideal for securing a proper marketplace to serve private companies. Singapore’s Recognised Market Operator regime enables us to offer the best legal set-up to serve our growing international customer base, whereas in Europe the alternative would have been a Multilateral Trading Facility. Although Europe has been thinking about more liberalisation or clear exemptions, no major moves have been made so far.
Our ambition to be the world’s marketplace for tradable private companies means we wish to start attracting larger volumes including more mature companies and professional investors. This should enable more growth to all of our companies and access to a wider range of tradable investments for investors. The licence is a critical factor in making this possible, as they won’t come to an unregulated marketplace.
Q: Is the Recognised Market Operators regime new in Singapore?
No. There are currently 47 Recognised Market Operators licensed to operate in Singapore. Amongst this list of 47, we also see our Singapore competitor, 1Exchange, which serves private companies in the region. We are not the first, or test pilot, to be a Recognised Market Operator in Singapore offering trading liquidity for private companies. There are various other marketplace operators who are running their marketplace in Singapore. They also have issuers from Europe, USA, Australia, etc. So Singapore has experience with many Recognised Market Operators in the past. Funderbeam’s move to Singapore should therefore not be a concern to Issuers and Investors.
Q: Will Singapore law treat insider trading and market manipulation differently than Europe?
Insider trading refers to the act of executing trades based on material non-public price-sensitive information, ahead of such disclosure to the general public. Founders will know more about the company, but this may be confidential information that is never disclosed to the public. We have referred to the requirement of investors being equally informed in terms of disclosure of material information (please also see above for our comments regarding material information disclosure requirement). If there is material information to be disclosed to some investors, this information should be made available to all other investors. If not, founders, employees and investors who have the privileged information, and trade intentionally on it, may be found guilty of insider trading. The same principle behind insider trading exists in the EU/UK and Singapore.
It is our understanding that transactions placed for legitimate reasons and in accordance with accepted market practice do not amount to market manipulation. We note that market manipulation is considered a punishable offence under EU laws as well as laws of Singapore. We ask all our clients to report any such activity to Funderbeam, should they become aware of it.
Q: Who are the “Trading Members”?
Funderbeam Marketplace Trading Members are our own Funderbeam group entities – Funderbeam Markets Ltd (London entity) and Funderbeam Markets Pte Ltd (Singapore entity), which represent all existing clients. With this setup Funderbeam secures that existing platform investors have access to global trading. There are no external Trading Members as of now, although it may be a possibility for the future.
Q: What are the reasons to have the Trading Member in the UK and the Marketplace Operator in Singapore?
Most investors on Funderbeam are regular, everyday, “retail” investors (they are not, for example, professional investors) and to access the Marketplace, they must trade through a Funderbeam entity that has a valid licence in the EU, such as Funderbeam Markets Limited in the UK. For EU regulatory reasons, it is not appropriate for EU investors to access the Singapore market directly. As a result, all of the client relationships are with Funderbeam Markets Limited UK which ensures a continuation of the regulatory standards applicable in Europe. As an example, as part of addressing Brexit, Funderbeam will be getting an EU subsidiary licensed, which will become a Trading Member alongside Funderbeam Markets Ltd