SGX to adjust minimum trading price requirement

The Singapore Exchange (SGX) has proposed changes to the minimum trading price (MTP) framework.
The Singapore Exchange (SGX) has proposed changes to the minimum trading price (MTP) framework.PHOTO: REUTERS

SINGAPORE - The Singapore Exchange (SGX) has proposed changes to the minimum trading price (MTP) framework that will allow stocks with larger market capitalisation to avoid the watch list.

Under the current MTP rules, a company listed on the Mainboard will be put on the watch list if its six-month volume-weighted average price is below 20 Singapore cents.

Changes were proposed on Tuesday (Aug 23) to add one additional requirement - that a mainboard company will also have to have a six-month average daily market capitalisation below S$40 million for it to be put on the SGX watch list.

As part of these changes, the watch list review frequency will also be adjusted from quarterly to half-yearly. The proposed changes are now up for public consultation, and are expected to be implemented by June next year.

There are currently 55 companies on the SGX watch list as they did not make the 20-cent MTP requirement in the last review in March.

With the proposed changes, 16 of the 55 companies would be removed from the list, SGX chief regulatory officer Tan Boon Gin said, citing market figures as at Aug 1.

The watch list will be frozen for now and there will be no new entrant until there is clarity on whether the proposal will be implemented, he added.

The existing MTP rules officially kicked in in March amid some market resistance, with remisiers and investors feeling that the move will lead to value disruption.

Those on the watch list have 36 months to either meet the MTP criteria and exit from the list, or choose to drop down to the Catalist board.

The latest announcement followed review that showed companies with market cap of over S$40 million have better liquidity and lower volatility on the stock market, compared with those with smaller market cap.

"We have been considering market developments and feedback in the implementation of the requirement and made refinements along the way. We are now proposing further refinements to make it more targeted and effective," Mr Tan said.

The SGX has made several adjustments to its regulatory approach in recent months as it gauged the market reaction and impact.

In December, the bourse moved to make its Trade with Caution alerts more detailed, instead of the automatically generated message previously.

The MTP watch list review slated for June this year was also pushed back to give affected companies more time to consider their options and response.