Date: February 7, 2014
SIAS is pleased to note the measures MAS and SGX are proposing to help advance the interest of investors and other stakeholders in improving transparency. Generally, we note that the proposals are aimed at three main areas, namely:
A. Promoting orderly trading and responsible investing;
B. Improving the transparency of market intervention measures; and
C. Strengthening the process for admitting new listings and enforcing listing rules and the breaches
1. Minimum trading price proposal
SIAS is in favour of this measure as it will promote responsible trading. We note that there is already a minimum share price in force for IPO listing. We are of the view that this measure will also prevent companies from making rights issue calls that could potentially bring down the price of the share to the detriment of investors. It will also help to maintain the profile of the main board.
2. Collateral requirements for securities trading
SIAS is of the view that currently the liquidity of our stock market is, to some extent, dependent on traders. The introduction of collateral of min 5% of open position will help to discourage a gambling mentality and encourage an investing mindset. Requiring some form of collateral is in-line with international best practice. Singapore is one of 2 exceptions in the global market where investors can trade in securities without the need to put up any collateral. This will also encourage more responsible trading behaviour among retail investors because investors will think twice and pay more attention to the stock they intend to trade. The proposal to move the settlement period from T+3 to T+2 is also in line to encourage a more responsible and long-term investment behaviour.
3. Short position reporting requirement
SIAS welcomes this as it improves transparency and provides more information to help retail investors become more aware of the factors affecting their investments and enables them to make more informed decisions.
4. Improving transparency of market intervention measures
SIAS is of the view that this initiative will ensure fair and transparent the intervention measures imposed. It also helps investors with the information especially with respect to the trading restrictions put by securities brokers on selected stocks and all investors will have access to the same level of information. This will enable investors to have all the information available to make informed investment decisions.
5. Strengthening the SGX listings and enforcement process
SIAS is of the opinion that the introduction of these measures will promote better self-governance and address SGX’s role as a self-regulatory organisation. It will also improve the overall review process.In addition, it will also enhance SGX’s ability to undertake regulatory sanctions, such as imposing a fine, if the issuer is found to have breached listing requirements.
6. SGX queries and “Trade with caution” announcements
SIAS welcomes these measures as it will send the alarm bell to investors to trade with caution. The requirement that boards of listed companies should approve the announcements will bring comfort to investors. SIAS calls on retail investors to also monitor the announcements of companies they are invested in or intending to invest, so as to make an informed investment decision.
Overall, SIAS is satisfied that in view of the fact that the investing environment has changed in recent years, these measures would result in a more transparent and orderly investing market and encourage retail investors to become more responsible. Therefore, these measures are timely and are most welcome. SIAS notes that there will be a long consultation period and it will take some time before these measures are implemented. SIAS will work together with MAS and SGX to shape the final outcome.
David Gerald
President & CEO
SIAS
