MAS and SGX issue response to the consultation on the review of the securities market structure and practices

The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) today issued their response to the joint consultation paper on the Review of the Securities Market Structure and Practices, which was published on 7 February 2014.

2          MAS and SGX thank all respondents for the extensive feedback. Respondents were generally supportive of the proposals in the consultation but suggested some modifications to be made. MAS and SGX have taken into account the feedback received and decided to proceed with all five proposals as follows:

  1. Minimum trading price. To introduce a minimum trading price of S$0.20 as a continuing listing requirement for issuers listed on the SGX Mainboard. This is to address risks of low-priced securities being more susceptible to excessive speculation and potential market manipulation. A transition period of 12 months will be given to affected issuers to undertake corporate actions to meet the new requirement. This proposal will, over time, improve the quality of issuers listed on the SGX Mainboard.
  2. Collateral requirement for securities trading. To require securities intermediaries to collect minimum 5% of collateral from their customers for trading of listed securities to promote financial prudence. This will help mitigate the risk of excessive leverage assumed by investors. It will also reduce reliance on remisiers to manage the credit risk exposures of customers. Institutional investors, trades settled through delivery-versus-payment mode, and funds from the Central Provident Fund and Supplementary Retirement Schemes will be exempted from the collateral requirement.
  3. Short position reporting requirements. To implement aggregate short position reporting to further enhance transparency of short selling activities in the securities market. The value threshold has been adjusted upwards such that only short positions that exceed the lower of 0.05% or S$1 million of issued shares will have to be reported. Aggregated information will be released on a weekly basis.
  4. Transparency of trading restrictions imposed by securities intermediaries. The Securities Association of Singapore (SAS) will take the lead to develop industry guidelines. This is to address the concerns of information asymmetry with regard to the dissemination of information on trading restrictions imposed by their members. The industry guidelines will provide guidance on publication of the trading restrictions and their rationale, and to promote consistent practice among SAS members given the differing practices currently.
  5. Reinforcing the SGX listings and enforcement framework. SGX will establish three independent committees, namely Listings Advisory Committee, Listings Disciplinary Committee and Listings Appeals Committee. They will introduce a wider range of sanctions for breaches of listing rules. These will further strengthen SGX's listings process, improve transparency of its disciplinary process and enhance its ability to enforce the listing rules.

Further details for each proposal are set out in the response to feedback received from the joint public consultation, which may be viewed at this link:http://www.mas.gov.sg/News-and-Publications/Consultation-Paper/2014/Review-of-Securities-Market-Structure-and-Practices.aspx .

3          To improve retail investors' access to a broader range of listed securities, particularly blue-chip stocks, SGX will reduce the board lot size for securities listed on SGX from the existing 1,000 shares to 100 shares in January 2015. SGX will announce details of this initiative by end August 2014.

4          Mr Lee Boon Ngiap, Assistant Managing Director, Capital Markets, MAS, said, "An independent assessment by the International Monetary Fund last year affirmed that our securities market's compliance with international standards is generally high. MAS' enforcement philosophy relating to the securities markets and financial intermediaries was also assessed to be cogent, outcome-focused and well developed. These proposals will further enhance the robustness and resilience of our securities market and instill greater investor confidence in our marketplace."

5          Mr Magnus Bocker, Chief Executive Officer, SGX, said: "We appreciate the valuable feedback we have received on the proposed enhancements to the securities market. These enhancements are yet another significant milestone in Singapore's journey to become a leading financial centre and investment venue of choice. We will continue to work closely with MAS to bolster the local securities market so as to serve the needs of investors and companies."

6          The implementation of the initiatives will be phased in over the next 24 months. MAS and SGX will work with the industry on the implementation details and will undertake further consultations on the relevant regulatory requirements or operational rules, where applicable. Industry participants will be provided transition periods to ensure their operational readiness before the requirements take effect. SGX will also step up its investor education efforts to promote public awareness on the changes arising from these proposals.

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For media enquiries, please contact:

Denise Gan
Corporate Communications
Monetary Authority of Singapore
Tel: 6229-9425
Fax: 6227-0705
Email:denisegan@mas.gov.sg

Benjamin Tan
Marketing & Communications
Singapore Exchange Ltd
Tel: 6713-7716
Fax: 6535-7919
Email:benjamin.tan@sgx.com


Annex

A summary of the proposals to be implemented are as follows:

(A)          Promoting Orderly Trading and Responsible Investing
  1. Minimum trading price
  • Introduce a minimum trading price of S$0.20 as a continuing listing requirement for Mainboard-listed issuers. 
  • Provide a one-time transition of 12 months, after which affected issuers will be provided a cure period of 36 months to take remedial actions. Affected issuers which fail to take remedial actions during the cure period may be delisted from the Mainboard. The existing delisting rules will apply.
  • Study further the feasibility of setting up a facility that caters to a broader class of issuers. Respondents provided feedback that it is not viable to set up an alternative trading facility to cater solely for mandatorily delisted issuers due to limited demand and practical post-trade settlement difficulties, including the transfers of delisted shares. 
  • Expected implementation : March 2015
  1. Collateral requirement for securities trading
  • Require securities intermediaries to collect collateral from customers based on a minimum 5% of their net open positions on T day except for exempt trades
  • Exempt trades refer to trades by institutional investors, trades settled through delivery-versus-payment and funds from the Central Provident Fund and Supplementary Retirement Scheme.
  • Require customer cash collateral to be held in trust accounts with licensed banks in Singapore at all times, except for cash collateral collected in relation to trades on overseas securities exchanges.
  • Expected implementation : Mid 2016
  1. Short position reporting requirements
  • Require short sellers 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 : Mid 2016
(B)        Improving Transparency of Intervention Measures
  1. Transparency of trading restrictions imposed by securities intermediaries
  • The Securities Association of Singapore (SAS) to develop industry guidelines for its members to address the concerns of information asymmetry due to differing practices of trading restriction announcements.  
  • Expected implementation : End 2014
(C)    Strengthening the process for admitting new listings and enforcing against listing rules breaches
  1. Reinforcing the SGX listings and enforcement framework
  • Establish an independent Listings Advisory Committee to consider listing policy issues and listing applications that meet certain referral criteria.
  • Establish independent Listings Disciplinary Committee and Listings Appeals Committee, 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.
  • Expand the range of regulatory sanctions for listing rule breaches 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.
  • Expected implementation : Early 2015
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