Q: Many stocks have become highly active and more volatile in recent months. As an investor, I am wondering if this is a sign of unusual trading activity. What investor safeguards are in place in instances of unusual activity?
A: The Singapore Exchange (SGX) deploys a customised surveillance system that detects any unusual trading activity in individual counters on a real-time basis throughout the day.
Where a trading activity cannot be explained by corporate developments, macroeconomic factors, industry developments and other factors, we will publicly query the company in case there is material information yet to be disclosed.
The query will appear under the company's name on the Company Announcements page on www.sgx.com
While listed companies take their obligations seriously, there could be instances where they are unaware that fast-developing corporate actions or activities have leaked. The query serves to remind listed companies to promptly address the unusual trading movements.
When making investment decisions, investors should note these public queries and the responses of the companies concerned. Each SGX query to a company serves as a real-time up-to-the-minute alert to investors to trade with care.
The number of public queries has risen significantly in recent months: In January and February this year, we issued a total of 26 public queries to companies, or an average of 13 a month. This compares with an average of five public queries a month last year.
Given that each public query is issued because a certain trading activity cannot be explained, the high number of queries should serve as another reminder to investors to be cautious when trading.
When reviewing any unusual trading activity, we also look into whether misconduct, such as market manipulation or insider trading, has occurred.
Misconduct such as market manipulation or insider trading is against the law, and the SGX puts significant resources into detecting and investigating such market misconduct.
However, investors may not hear about such investigations because we conduct them in private and away from the public eye. We do this for two reasons.
First, we do not want to alert the possible offenders, which could jeopardise the outcome of the investigation. Second, the Securities and Futures Act requires the SGX to keep information about market participants and their market activity confidential.
In addition to investigating possible market misconduct, we will also monitor corporate developments in these counters to determine whether the company's previous responses were factual, complete and timely, as required by the listing rules.
In our investigations, we work closely with the Monetary Authority of Singapore and the Commercial Affairs Department, as they have statutory powers against offenders of the law.
Richard Teng
Deputy Chief Regulatory Officer
Singapore Exchange
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