The Singapore Exchange (SGX) is bringing back lunch breaks and widening the bid-and-offer spread, giving up a faster-paced approach to boosting volumes made after a penny stock crash in 2013 that rattled confidence and saw retail business slump.
The suggestion to implement a mid-day break from noon to to 1 p.m. SIN/HK comes more then five years after SGX scrapped its lunch break in favour of continuous all-day trading to boost volumes. The u-turn was a result of feedback from market participants who prefer shorter trading hours. SGX also observed that trading activity during the proposed one-hour break is thin.
The shorter trading hours would still allow Singapore to overlap with key markets in Asia, specifically Japan, Hong Kong and Thailand, SGX said. The bourse also remains the market with the longest trading hours in Asia from 9 a.m. to noon and 1 p.m. to 5.p.m. SIN/HK.
Another proposal floated by SGX is widening the minimum difference between bid and offer for stocks priced from 1 to 1.99 Singapore dollars by 25 to 50 basis points. This means that investors buying a stock within that range would have to make bids at intervals of 1 cent Singapore instead of the current 0.5 cent Singapore.
Chew Sutat, SGX's head of equities and fixed income, told reporters at a briefing that the wider spread could attract more retail traders to buy the 60-odd stocks that fall within that price range. This is especially so for those who currently do not find the returns of these stocks attractive due to the narrow margins that they can make.
"Investors are conscious of costs, not only the exchange fee but also commission fees. Some may find that because of the total costs, they need a wider spread to make the transaction more economical," he said.
SGX is consulting the public on these proposals until March 29.
In a separate announcement, SGX said it will mandate all companies seeking an initial public offering (IPO) on its mainboard to set aside at least 5 per cent or S$50 million (US$35.7 million) of their offer size, whichever is lower, to retail investors.
The bourse has in recent years increased its effort to restore confidence after a penny stock rout in end-2013 wiped out about S$8 billion (US$5.67 billion) in market value. That, along with uncertainties in the global market, also saw a reduction in trading volume and new listings on the SGX.