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PR Newswire
19-11-2014, 07:20 AM
LETTER TO THE EDITOR (BT)
MAS, SGX and market players pow-wow needed
18 Nov 5:50 AM
I'VE been a trading representative for the past 20 years and the silence in the dealing
rooms of late is deafening. It is now quieter than the library! When was the last time
the Singapore Exchange management visited our dealing rooms? The epitome of
capitalism is the stock market. This prolonged quietness in the market does not reflect
well on our status as a premier financial centre in the region. To be fair, SGX has
embarked on several moves to rebuild vibrancy in our markets such as the takeover of
the Australian exchange, extended settlement contracts, American Depository
Receipts, exchange traded funds, removal of lunch breaks, and reduction of bid spreads.
However, many of these measures have failed without much accountability. I'm afraid
that some new measures that the SGX is planning to implement - such as the
introduction of smaller board lot sizes and collaterised trading - might similarly fail.
The proposed measures might in fact make trading more cumbersome and further
diminish the liquidity in our markets.
SGX recently had a series of roadshows to engage retail brokers. It mentioned in the
presentations that it had introduced a market maker and liquidity provider
programme to help boost liquidity. Many brokers present strongly opposed this
programme for fear that it would lead to exaggerated prices. The sheer size of the
market makers would leave retail investors at a huge disadvantage. SGX has
introduced buy-in penalties for accidental short-sales, with possible waivers on appeal.
Why introduce such archaic measures when short-sales are not prevalent but create
fear among market participants for honest mistakes. Also, in the event of mistakes,
market participants are now subject to the buy-in process (with high charges levied)
when in the earlier years, the mistakes can be rectified on the next trading day.
Between January and October 2014, SGX had a total of 30 equity listings. Some of
them have posted spectacular returns since listing. However, further digging would
reveal that many of them had only placement shares and no shares (or a negligible
number of shares) were offered to the public. It makes one wonder whether the price
appreciation is due to fundamental reasons or not. It is supposed to be an initial
PUBLIC offer (IPO), not an initial PRIVATE offer!
I can go on and on as to why our market is in such a dire state. The Monetary Authority
of Singapore, SGX and the various market participants need to come together to
discuss how to rebuild confidence in the market.
S Nallakaruppan
MAS, SGX and market players pow-wow needed
18 Nov 5:50 AM
I'VE been a trading representative for the past 20 years and the silence in the dealing
rooms of late is deafening. It is now quieter than the library! When was the last time
the Singapore Exchange management visited our dealing rooms? The epitome of
capitalism is the stock market. This prolonged quietness in the market does not reflect
well on our status as a premier financial centre in the region. To be fair, SGX has
embarked on several moves to rebuild vibrancy in our markets such as the takeover of
the Australian exchange, extended settlement contracts, American Depository
Receipts, exchange traded funds, removal of lunch breaks, and reduction of bid spreads.
However, many of these measures have failed without much accountability. I'm afraid
that some new measures that the SGX is planning to implement - such as the
introduction of smaller board lot sizes and collaterised trading - might similarly fail.
The proposed measures might in fact make trading more cumbersome and further
diminish the liquidity in our markets.
SGX recently had a series of roadshows to engage retail brokers. It mentioned in the
presentations that it had introduced a market maker and liquidity provider
programme to help boost liquidity. Many brokers present strongly opposed this
programme for fear that it would lead to exaggerated prices. The sheer size of the
market makers would leave retail investors at a huge disadvantage. SGX has
introduced buy-in penalties for accidental short-sales, with possible waivers on appeal.
Why introduce such archaic measures when short-sales are not prevalent but create
fear among market participants for honest mistakes. Also, in the event of mistakes,
market participants are now subject to the buy-in process (with high charges levied)
when in the earlier years, the mistakes can be rectified on the next trading day.
Between January and October 2014, SGX had a total of 30 equity listings. Some of
them have posted spectacular returns since listing. However, further digging would
reveal that many of them had only placement shares and no shares (or a negligible
number of shares) were offered to the public. It makes one wonder whether the price
appreciation is due to fundamental reasons or not. It is supposed to be an initial
PUBLIC offer (IPO), not an initial PRIVATE offer!
I can go on and on as to why our market is in such a dire state. The Monetary Authority
of Singapore, SGX and the various market participants need to come together to
discuss how to rebuild confidence in the market.
S Nallakaruppan