Singapore Exchange Proposes Bringing Back Lunch Breaks, Widening Bid SizesBy
Exchange to consult public on one-hour lunch intermission
SGX also mandates allocating IPO shares to retail investors
Singapore Exchange Ltd., which runs the city’s stock market, is proposing to bring back a lunch break and boost minimum bid sizes as it seeks to boost trading.
The exchange operator is consulting the public on the plans, which it said will address market conditions and balance the diverse objectives of participants, according to a statement released Wednesday. It’s proposing to introduce a midday trading break from 12 p.m. to 1 p.m. SGX plans to raise the tick size for stocks and relevant securities trading in the S$1 to S$1.99 range, to one Singapore cent from half a cent. It also plans to widen a forced order range, which helps to prevent error trades.
SGX also said it will mandate that companies aiming to list on its main exchange must allocate at least 5 percent of their stock offering, or S$50 million ($35 million), whichever is lower, to small investors. The ruling will kick in on May 2 and is aimed at having greater retail participation. The exchange in 2016 proposed a minimum of 10 percent or as much as S$100 million be distributed to retail investors.
SGX in March 2011 scrapped the break, which lasted from 12:30 p.m. to 2 p.m. every day, saying it could help add as much as 10 percent to volumes. The proposed midday halt is now seen to have minimal impact with only 5.1 percent of trading done during the hour, SGX said.
“Day trading is like going to battle every day so the lunch break is essential to refresh ourselves,” said Yong Chin Hiong, a director at proprietary trading firm Quattro Capital Pte. “If the market is good, it doesn’t matter if it’s open for seven hours or eight or four, people will still trade.”
The daily value of shares traded this year have climbed 10 percent to $838 million from 2016, according to data compiled by Bloomberg. An average of $1.18 billion shares changed hands each day in 2010, before the intermission was abolished, the data show. Singapore’s stock market has the longest trading day among major venues in Asia.
“SGX constantly reviews its market structures, rules and policies, taking into account changing market conditions, regular dialogue with the industry, and supportive data analysis,” Chief Executive Officer Loh Boon Chye said in the statement.
Increasing Minimum Bid Size
- Proposed change based on decline in traded value in S$1-S$1.99 range; lower retail participation
- Market feedback that this could generate more viable opportunities for retail traders
Widen Forced Order Range
- Plan to raise to 30 bids from 20 bids
- Feedback that this will help improve order efficiency
- Market participants prefer shorter trading hours while recognizing benefits of continuous all-day trading
- Proposal retains significant overlap in trading hours with key Asian markets; coincides with lower trading activity during midday
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