Singapore Exchange to roll out new and revised order types for more flexible trading

Investors will be given greater flexibility to execute their trades, when the Singapore Exchange (SGX) rolls out new order types for securities from March 31. -- ST FILE PHOTO: KUA CHEE SIONG
Investors will be given greater flexibility to execute their trades, when the Singapore Exchange (SGX) rolls out new order types for securities from March 31. -- ST FILE PHOTO: KUA CHEE SIONG

INVESTORS will be given greater flexibility to execute their trades, when the Singapore Exchange (SGX) rolls out new order types for securities from March 31.

One of the proposed changes would allow investors to execute market orders and market-to-limit orders throughout the day's trading session.

Market orders are buy or sell orders executed immediately at prevailing prices, while market-to-limit orders allow investors to indicate their risk limit.

For instance, an investor who wants to buy 10,000 shares of counter X at the market price of $2, can enter a command that will not accept any transactions above or below his preferred price.

These orders were only available during the auctioning phase of the market - that is, during market opening and closing routines.

But the extended hours would likely benefit intra-day traders as well as traders that want to fulfill large orders per day, said remisier Alvin Yong.

The SGX will also introduce two forms of price triggered orders by the end of the month. It will allow investors and traders to enter more long positions without actively monitoring price movements and aid them in risk management, said industry players.

Investors can key in "stop orders" that will minimise losses or protect the profit on their existing position. For example, an investor that bought shares at $1 apiece can dictate what his lower threshold is. He can indicate that if the share price falls to 95 cents or less, he would want to cut his losses.

Such a mechanism will protect investors from huge price swings, as witnessed during the spectacular penny stock crash last October, said Mr Yong.

An "if-touched" order will also be introduced, allowing investors to buy and sell at specific price levels without constantly monitoring price movements.

These order types are already offered by some brokerages, but will be extended to all platforms to be used at their discretion, the SGX said.

Mr Yong told The Straits Times that he welcomes the move to introduce revised and new order types as they are already used by sophisticated traders.

"This is probably an attempt by the bourse to level the playing field for retail investors, as many have voiced concerns that they are no match for sophisticated traders that can utilise such order tools," he said.

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