Singapore Exchange Considers Changes to Minimum Price Rule

(Bloomberg) -- Singapore Exchange Ltd. is reviewing a minimum trading price rule aimed at cutting excessive speculation, less than six months after it was introduced.

Southeast Asia’s biggest exchange operator is proposing scrapping the S$0.20 ($0.15) minimum trading price rule for companies listed on its largest venue that have a market value of at least S$40 million. Such shares have greater liquidity and lower volatility than those with a lower capitalization, according to SGX.

“We only introduced this in March so it’s something that we’re still monitoring,” Tan Boon Gin, the exchange’s chief regulatory officer, told reporters on Tuesday. The rule “was a big policy change for us, and as with any other policy change, after implementation with the benefit of feedback and experience, there are opportunities to improve.”

SGX in 2014 announced new rules in the wake of an October 2013 penny-stock crash that wiped out $6.9 billion in market value over three days. The minimum trading price rule was introduced to curb excessive speculation and potential market manipulation in penny stocks. The bourse also started circuit breakers to protect investors from extreme price swings.

“This policy remains sound,” Lee Boon Ngiap, assistant managing director for capital markets at the Monetary Authority of Singapore, said in an e-mailed statement. “We support SGX’s latest proposals which seek to refine the MTP watch-list criteria to achieve the same policy objective in a more targeted way.”

No new companies will be added to its minimum trading price watch list pending a public consultation, Tan said. Companies placed on the list have three years to meet the trading price requirement or be forced to delist.

To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net. To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Sarah McDonald