91 error trades in New Silkroutes shares cancelled

An SGX spokesman said transactions cancelled were those done below 40 cents and up until 9.23am yesterday.
An SGX spokesman said transactions cancelled were those done below 40 cents and up until 9.23am yesterday.PHOTO: BLOOMBERG

Over 52m shares mistakenly matched to wrong price due to confusion over firm's recent share consolidation

The Singapore Exchange (SGX) cancelled 91 "error trades" involving 52.3 million shares of New Silkroutes Group stemming from confusion over the recent consolidation of the company's shares.

Market participants said the shares had been mistakenly matched at around 1.5 cents close to the opening bell yesterday, the first day the company was trading following a consolidation of every 500 shares into one.

Based on Tuesday's closing price of 0.1 cent, each of the new shares should have been worth 50 cents.

But more than 52 million shares changed hands in erroneous transactions that briefly wiped out almost all of the energy, healthcare and technology company's value.

But more than 52 million shares changed hands in erroneous transactions, which briefly wiped out almost all of the energy, healthcare and technology company's value.

"There's speculation that the person who keyed in the order probably didn't know that the shares have been consolidated, and sold what they thought they had, but in fact, didn't have," a remisier said.

"We were alerted that there were complaints of error trades at around 10.18am. An hour later, we were told 52.3 million shares executed pursuant to error trades have been cancelled."

An SGX spokesman said: "Transactions cancelled were those done below 40 cents and up until 9.23am." Based on the new share price of 50 cents, only orders between 40 cents and 60 cents can be validly keyed in and accepted by the SGX trading system.

"In reviewing the cases, SGX was satisfied these transactions were the result of genuine error on the investors' part, attributable to the recent consolidation of New Silkroutes shares," the SGX said. "Allowing the erroneous trades to stand would cause disproportionate harm, including the settlement risk of failed trades of significant size."

The SGX added that it has reminded member firms and their trading representatives to exercise due care when executing orders in newly consolidated shares, including having appropriate safeguards for clients who transact using means such as Internet trading.

DBS Vickers Securities chief executive Lim Kok Ann said: "We need to do more to engage with investors who are located offshore."

"Listed companies will always make announcements and even hold EGMs when they consolidate their shares.

"Shareholders should therefore be aware of the consolidation, but errors can still occur," he said.

The SGX has extended its minimum trading price (MTP) review date by six months to Sept 1 next year for companies that consolidate their shares to comply with MTP before March 1 next year.

The rule requires all mainboard-listed shares to have a minimum price of 20 Singapore cents.

It will affect 167 companies, with over half so far opting for a share consolidation to get their prices up. The rule is aimed at reducing excessive speculation.

The shares of New Silkroutes closed at 49 cents, with nearly 56 million shares traded.

Based on Tuesday's closing price of 0.1 cent, each of the new shares should have been worth 50 cents.

A version of this article appeared in the print edition of The Straits Times on December 17, 2015, with the headline '91 error trades in New Silkroutes shares cancelled'. Print Edition | Subscribe