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SGX consults on market structure changes

08 March 2017  |  2144 views  |  0 Source: Singapore Exchange

Singapore Exchange (SGX) is consulting the public on proposed adjustments to the equities market structure aimed at addressing market conditions, while balancing the diverse objectives and interests of different segments of participants in the market ecosystem.

The three proposed adjustments are:

Increasing the minimum bid size for stocks and relevant securities trading in the S$1.00 to S$1.99 range;
Widening of the forced order range for stocks and relevant securities; and
Changing trading hours via a mid-day break from 12.00pm to 1.00pm.

“SGX constantly reviews its market structures, rules and policies, taking into account changing market conditions, regular dialogue with the industry, and supportive data analysis,” said Loh Boon Chye, CEO of SGX.

Minimum Bid Size

SGX proposes to increase the minimum bid size for stocks and relevant securities trading in the S$1.00 - $1.99 price range from the current $0.005 to $0.01. The proposed change is based on a decline in traded value in the $1.00 to $1.99 price range in recent years and lower retail participation in that price range relative to those of other price ranges. It also considered market feedback that a wider minimum bid size could generate more viable trading opportunities taking into consideration total transaction costs for some segments of the market, such as retail traders. This in turn may promote a more balanced mix of participants for securities in this price range.

Forced Order Range

SGX is proposing to widen the forced order range for stocks and relevant securities from the current +/- 20 bids to +/- 30 bids, in response to market feedback to improve order entry efficiency.

Trading Hours

Market feedback indicates that while the benefits of continuous all-day trading (“CAT”) remain relevant, market participants prefer shorter trading hours. The proposed one hour mid-day break from 12.00pm to 1.00pm is re-timed from the earlier mid-day break from 12.30pm to 2.00pm in effect before CAT was implemented in August 2011.

The timing of the proposed mid-day break allows us to retain significant overlap in trading hours with key markets in Asia, which was one of the key intended benefits of CAT, and coincides with the generally lower trading activity of the day.

During this break, market participants can continue to enter and manage their orders and SGX will publish an indicative equilibrium price (IEP) based on the orders received in the order book to facilitate price discovery and enable investors to better manage their risks.

“We recognise that the three proposed changes will affect segments of the market differently. We look forward to an active participation in the public consultation and collectively working towards a common goal of enhancing the equities market. We will continue to calibrate and implement initiatives that we believe are for the long term interests of a vibrant and resilient market,” Mr Loh added.

The consultation will open till 29 March 2017.

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