Conservative investors who do not want to invest in the stock markets end up doing one of the following:

• Chase after the best fixed deposits offers
• Get sucked into some promotional offers with a marketing gimmick of a decent return but actually has a lower rate of return
• Get persuaded to buy a structured deposit or structured product that a bank officer proclaims as low risk
• Get locked into long term insurance endowment plans with not so high projected returns
• Buy some unit trusts with a so-called dividend yield

All these is set to change as MAS and SGX looks to make bond investing more easily available to retail investors. This has taken a long time coming as this idea was mooted way back in 2010.

Two consultation papers (one by SGX and one by MAS) have been released to solicit public feedback on this:

MAS-Consultation-Paper-on-Facilitating-Bond-Offerings-to-Retail-Investors

SGX-Public-Consultation-Retail-Bonds

Issuers who meet the criteria will be able to issue bonds directly to retail investors without the hassle of coming up with a prospectus. Currently, this is one of the stumbling block as most companies find it easier to simply issue bonds to institutional investors without the additional costs of preparing a prospectus.

Looking at the proposal, it seems they are starting out on a more cautious note as the criteria is quite stringent. There are pros and cons to this approach.

Pros – Lower chance of a default and safer for investors

Cons – The coupon rate will not be so high

I find this an irony as among listed companies, you can already find companies of all sorts of quality – from the sold government-linked blue chip, to the loss making S-chip. There is no barrier to anyone buying shares in such companies and furthermore bond holders are senior to equity holders if the company goes bust.

I feel that they should lower the criteria to enable more companies to raise capital via the retail bond markets and also give investors more choices of what bonds they want to invest in.

Of course, it is essential to make sure that investors who buy bonds know what they are getting into. After all, bonds are fundamentally different from fixed deposits.

To leave your comments, please go to : Consultation Paper on Retail Bond Offerings

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)

These 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.

To leave your comments, please go to : Outcome of Securities Market Structure and Practices Review

StockWhiz is a trading simulation competition by SGX where participants can win real money.

There are 20 prizes each month (up to S$2500 each winner, depending on the winner’s realized profits in the month), 3 overall prizes (up to S$10000 each winner, depending on the winner’s realized profits for the entire competition period) and 10 prizes each fortnight (S$300 each) randomly drawn from the participants eligible for each fortnightly quest.

This works out to a maximum total prize money of $198,000.

The contest runs from 30 June 2014 to 30 September 2014. The full StockWhiz contest rules can be found here:

StockWhiz Contest Rules

This time round, the contest is run using a phone application called TradeHero.

To enter the contest, you will need to download the TradeHero app on your iPhone or Android device. Unfortunately, those without a smartphone will not be able to take part. However, this also means that the number of players this time round will be much lesser, making the chances of winning much higher.

The StockWhiz contest for this year does not seem to be very popular so far. On the leaderboard, only 135 players have made profits and the top player is currently up around 12%.

I tried downloading the TradeHero app on my phone. Installing was straightforward, although I was a bit confused with the registration process. Tried to login using the “Connect with Facebook” but it didn’t work. I had to go to another screen to “Register with Facebook” instead. Only then can I login.

After login, I clicked on the StockWhiz icon to register but it continued to load for quite a while. I aborted the process but the registration was still successful.

Previously in the week, I also had difficulty loading the StockWhiz contest website, although it’s loading fine today.

Probably all these hiccups are causing the low number of participants so far.

To leave your comments, please go to : SGX StockWhiz Contest 2014

Question 1: MAS and SGX seek views on:  (i) the proposed concept of a minimum trading price as a continuing listing requirement for issuers listed on the Mainboard.

The minimal trading price proposal is unnecessary and a step in the wrong direction.

(a) Lower priced stocks (less than $0.20) actually move less in absolute % per tick as their spread is $0.001 (compared to $0.005 or $0.01 for higher priced stocks).

(b) The volatility of a stock is determined not only by their absolute trading price but by their underlying trading liquidity (e.g. number of orders on queue) and market capitalisation.

When Blumont and the other stocks was being pushed up to more than $1, the higher price did not stop the ongoing manipulation. This is because they are low market capitalisation stocks with low real trading orders in the queue (i.e. liquidity).

If there is $5000 worth of buy orders in the queue, whether the share price is $0.05 or consolidated to $0.50, it will still be $5000 worth of orders.

(c) Imposing a share consolidation for low price stocks will actually make the liquidity worse as the higher prices will make them less affordable and reduce the number of potential buyers.

(d) Comparing our prices with US as a benchmark is not a fair comparison as they allow people to transact from as low as 1 share.

To reduce share manipulation, we should rely more on the collateral proposal.

Question 2: MAS and SGX seek views on: (i) the proposal for securities intermediaries (including banks) authorised to deal in securities under the SFA to impose collateral requirements for securities trading based on a minimum collateral requirement of 5% of customers’ open positions.

I would suggest having different bands of stocks organised by their market capitalization. For those stocks with low market capitalisation that are easily manipulated, they should require higher levels of collateral. 5% is too little.

I would go as far to say that there should be some stocks that require 100% collateral all the time. This is no different from placing a permanent “designated” status on these stocks.

In the other extreme, shares that are in the STI index may not require any collateral as it is difficult for any one party to manipulate their prices.

Another method to determine the collateral requirements is by whether a company is listed on the Mainboard or the Catalist.

To leave your comments, please go to : Feedback to Review of Securities Market Structure and Practices

This will make it easier for investors to recognise the names of the companies they are invested in. This initiative only affects ordinary shares. Both the company’s stock code and legal name will not be changed.

Previously, there might be slight differences in how share might be represented as a trading counter and in the CDP statements. Sometimes, there might be an extra space or word, but sometimes, they might be totally unrecognisable.

For example: (trading counter name, CDP name)

• Weiye – Weiye Holdings
• WE Hldgs – WE
• Transpac – TIC
• St Trdg – Straits Trading
• SeeHS – SHS
• Far East Grp – Far East

I’m actually quite surprised that this discrepancy has been left hanging for so long. Good that SGX has finally decided to do something about it.

To leave your comments, please go to : Alignment of Names of Shares in Trading Counter and CDP