Martin Lee @ Sg
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Proposal to Reduce Shares Lot Size

Singapore Exchange (SGX) is finally going to reduce the standard board lot size.

Currently in the Singapore market, most shares are traded in lots of 1000 shares. This is as a result of a legacy from the past, when physical share scripts are delivered whenever you buy shares. Stipulating a minimum reduces the cost of delivering share scripts to small shareholders.

In most other stock exchanges, shares are traded in board size of one unit. You simply buy and sell shares based on the quantity you want, there is no concept of one lot.

Actually, most people will probably not know that there is also a unit share market in Singapore. This runs parallel to the main exchange and allows anyone to key in orders of 1-999 shares. However, the liquidity is extremely poor and you will have to place an order through your broker (except for POEMS which support online orders). The minimum commission usually makes such a trade non viable most of the time.

The new proposal from SGX suggests a reduction of the standard board lot size of securities listed on SGX from 1000 to 100 units. In the longer term, this might be further reduced to a one unit.

Their rationale is to allow more investors to be able to buy higher priced stocks.

The proposed standard board lot size of 100 units will apply to ordinary shares, real estate investment trusts, business trusts, company warrants, structured warrants, extended settlement contracts and shares on GlobalQuote. Existing board lot sizes of less than 100 units (such as Creative) will remain unchanged.

The board lot sizes for exchange traded funds, American Depository Receipts and fixed income instruments, including Singapore Government Securities and preference shares will also remain unchanged.

I think this is a positive move but I am disappointed that SGX did not suggest moving directly to a unit share market. Changing to 100 shares might just make some people confused.

Also, the change will be better if the brokerage firms work in tandem to reduce their minimum commission for trades. Otherwise, there might be cases where you end up with.

If you are interested in providing your feedback, you may write in to [email protected] by 6 September. My own feedback is given at the end of this post.

SGX has indicated that comments should be given in the following format (!):

Comments should be organized in the following manner:

  1. Cover page
  2. Statement of interest
  3. Table of contents
  4. Summary of major points
  6. Conclusion.

You can download the consultation paper here:  Reduction of Board Lot Size SGX

My feedback to the consultation

(A) Do you support the proposed reduction of standard board lot size from 1,000 to 100 units? Please provide reasons for your views.

Yes, the 1000 shares is a legacy of the past. All advanced markets use the unit share as the basis for trading. As everything is electronic nowadays, there is no need for any lot size. SGX should even consider changing directly to the unit share trading to reduce the confusion by retail investors.

The current unit share market is too illiquid to serve our needs.

Because of corporate actions (rights action and dividend in specie), it is often that investors end up with odd lots. For rights issue, the company has to set up a temporary odd lot counter. If we move to a unit market, there will no longer be a need to do so. Investors won’t have to worry about their odd number holdings and subscribe to scrip dividends with peace of mind.

(B) Do you consider potential fills to be a significant concern? Please provide reasons for your views.

It is not a big problem as participants can always buy up/sell down to fill the rest of their orders.

The problem can be totally negated if brokers remove the minimum commission altogether. This is what SCB does on their platform.
Actually, there is no need to investors to fill up their orders to the nearest thousand. If I bid for 10,000 and only 9800 is filled, so be it.

(C) Do you consider that the proposed reduction of the board lot size is beneficial to the market, taking into account the potential impact on administrative cost to issuers and possible avenues for managing such cost? Please provide reasons for your views.


Companies can use their discretion and provide soft copies of annual reports to reduce the administrative cost.

In any case, the number of shareholders owning less than a 1000 shares is not going to be significant.

Leave a Comment:

momo says 7 years ago

I am disappointed that lot size for ETFs remain unchanged, e.g. SPDR STI ETF.

    Martin Lee says 7 years ago

    Dear momo, welcome to my site. Most of the ETFs are already trading at lot size of 100 or less, that is why they are not affected in this round. Somehow, they left out STI ETF but there is an alternative DBS STI ETF which is traded in lot size of 100.

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