SGX to put more safeguards in place for trading in consolidated shares

SGX is introducing added safeguards for the trading of newly consolidated shares.
SGX is introducing added safeguards for the trading of newly consolidated shares.ST PHOTO: LIM YAOHUI

SINGAPORE - SGX is introducing added safeguards for the trading of newly consolidated shares, following several error trades and feedback.

It will now display "cum-entitlement" (CE) and "ex-entitlement" (XE) indicators on stock price pages. The indicators will be shown under the "remarks", or RMK, column of the stock price pages.

The indicators will serve as an additional reminder to investors that a stock is about to undergo, or has just undergone, a corporate action, SGX said in a statement.

The SGX will also introduce a reference price for newly consolidated stocks.

The reference price will be derived from the last traded price of the pre-consolidation trading counter adjusted for the consolidation or split ratio and cash distributions.

In cases where this may be inappropriate, for example if multiple corporate actions are effective on the same date, SGX may choose an alternative means of determining the reference price. It will make appropriate announcements regarding such means in this event.

Last week, the Singapore Exchange (SGX) cancelled 91 "error trades" involving 52.3 million shares of New Silkroutes Group.

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

Based on last 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.

Transactions done below 40 cents and up until 9.23am were eventually cancelled.

jkoh@sph.com.sg