SGX to reduce board lot size to 100 shares

Shares could soon be traded in board lots of 100 shares under a proposal from the Singapore Exchange (SGX) unveiled on Monday, Aug 19, 2013, - a ground-breaking move that would bring many more retail investors into the market. -- FILE PHOTO: BLOOMBER
Shares could soon be traded in board lots of 100 shares under a proposal from the Singapore Exchange (SGX) unveiled on Monday, Aug 19, 2013, - a ground-breaking move that would bring many more retail investors into the market. -- FILE PHOTO: BLOOMBERG

SHARES could soon be traded in board lots of 100 shares under a proposal from the Singapore Exchange (SGX) unveiled on Monday - a ground-breaking move that would bring many more retail investors into the market.

Pricey blue chips, which are out of reach for many smaller investors given they now have to buy at least 1,000 shares at a time, would suddenly be affordable.

The move to reduce the lot size from 1,000 now to 100 shares could occur by as early as the first quarter of next year.

There is even a longer-term plan to get lots down to just one share but this will take at least another two years after the 100-share lot is implemented.

Local investors have indeed been complaining about lot sizes for many years.

Most shares trade in lots of 1,000, making some blue chips prohibitively expensive for retail investors.

Buying just one lot of 1,000 shares of United Overseas Bank, for example, would cost more than $21,000 based on its $21.44 closing price on Monday.

About 40 per cent of shares on the Straits Times Index require a minimum investment of $5,000 - which means their unit price is $5 or higher, said SGX securities head Nels Friets.

It will also allow institutional investors to more precisely fine-tune their portfolios, Mr Friets added.

The move will bring the SGX more in line with global stock exchanges, which have been reducing lot sizes.

Most recently, Indonesia's exchange said that it will reduce lot sizes to 100 shares in December from 500 now.