Martin Lee @ Sg
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Outcome of Securities Market Structure and Practices Review

Six months ago, MAS and SGX issued a consultation paper on some changes to enhance orderly trading and transparency of stocks on SGX.

A couple of days ago, they released the results of the consultation:

MAS and SGX Issue Response to Consultation on the Review of the Securities Market Structure and Practices

If you like to read the considerations and rationale of the final outcome, you can refer to the feedback paper here:

Response to Feedback received on MAS/SGX consultation on the Review of Securities Market Structure and Practices (details)

short-sellingThese are the changes that will be implemented:

Minimum Trading Price

A minimum trading price of $0.20 will be imposed for mainboard companies (expected implementation date March 2015).

Firms will have a 12-month transition time to meet this requirement, mainly via share consolidation.

On an ongoing basis, an issuer’s volume weighted average price over a 6-month period prior to a review date must not fall below the threshold of S$0.20. Those who fail the criteria will be given a 36-month cure period to remedy the situation.

Minimum Trading Lot Size

The minimum trading lot size will be reduced from the current 1000 shares to 100 shares from Jan 2015 onwards. This will help mitigate the possibility of getting odd lots from the consolidation exercises that will be expected from some mainboard companies to meet the minimum $0.20 requirement.

Collateral Requirement for Securities Trading

Investors will be required to put up a collateral of 5% of their net open positions by the end of the day. This will apply to both local as well as overseas stocks. CPF and SRS trades will be exempted.

The suggestion to reduce settlement time by one day will be dealt with in another consultation paper.

Expected implementation date is in mid 2016.

Short Position Reporting Requirements

Short sellers will be required to notify MAS of their net short positions – excluding derivatives – based on the lower of 0.05% or S$1,000,000 of issued shares of a listed entity. The aggregated short positions will be published on a weekly basis.

Expected implementation date is in mid 2016.

Transparency of Trading Restrictions Imposed by Securities Intermediaries

The Securities Association of Singapore (SAS) will develop industry guidelines for its members to address the concerns of information asymmetry due to differing practices of trading restriction announcements.

Expected implementation is date in end of 2014.

Reinforcing the SGX Listings and Enforcement Framework

An independent Listings Advisory Committee will be set up to consider listing policy issues and listing applications that meet certain referral criteria.

A Listings Disciplinary Committee and Listings Appeals Committee will be set up to improve transparency and ensure fair and independent
administration of sanctions, as well as provide an avenue of appeal against certain regulatory decisions by SGX.

The range of regulatory sanctions for listing rule breaches will be expanded to include powers to impose fines on issuers, restrict the activities that issuers may undertake, as well as to make offers of composition for minor, and administrative or technical breaches.

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