THE statement which investors will have to sign before they can deal in foreign- listed shares has been released, paving the way for such trading to resume.
The safeguard was imposed by the Monetary Authority of Singapore (MAS) in order to ensure that investors know the risks they take when putting money into foreign bourses. Once such investors sign the statement with their brokers - acknowledging the risks they face by venturing into overseas markets - they can start dealing in foreign-listed shares.
The statement's release comes as a relief to the industry, as trading of foreign shares comprised 20 per cent to 30 per cent of many brokerages' business.
Brokerages are expected to roll out the implementation as early as next week to allow investors to trade foreign-listed shares on their online trading sites.
The final format of the risk-warning statement came as part of a recent MAS update offering guidelines on the sale of investment products.
UOB Kay Hian remisier Charlie Lim said: "The restrictions had upset both traders and brokers, and led to low and inactive trading volume for many foreign-listed shares."
Restrictions were imposed on retail investors in January to curb investing in what are classified as "specified investment products".
The aim is to protect them from dabbling in exotic financial instruments they may not understand, including foreign-listed shares. An investor who wanted to trade such products had to be "certified" by his brokerage.
This required him to either show that he had the relevant trading experience, or to take a test on the Singapore Exchange (SGX) website to show his competence.
MAS relented on the restrictions on the trading of foreign-listed shares in May. It said then that retail investors could trade these shares if the local broking industry could tag and identify those stocks that were essentially similar to those listed on the SGX.
The brokerage industry responded by "tagging" tens of thousands of shares and products across 14 stock exchanges that an investor could buy, regardless of his investment experience.
Although the deadline to lift the trading restrictions was slated for October, it was delayed, as the industry awaited the final copy of the risk-warning statement.