Lunch breaks, wider bid sizes good for market

Remisiers in Singapore welcome the return of the lunch break.

Without it, they (and their clients) would have to be stuck to their desks for eight hours each day.

There would be no window for corporate trading announcements, less interaction with clients, and no time to settle errands before the banks close.

Hence, the lunch break is an important component to revive market vibrancy and liquidity (SGX on track to woo investors; April 5).

Similarly, wider bid sizes can pump up market liquidity, as they attract more self-trades.

The Society of Remisiers (Singapore) agrees that the widening of bid sizes at the lower end should be applied to the 50 cents to $1.99 price range before it can be effective.

We do not think that with a wider spread, retail investors would have to pay a higher price to buy shares; that wider spreads give rise to increased speculation, and that speculation is a form of market inefficiency.

It is also inappropriate to equate speculation or trading in a market with market inefficiencies.

It is inappropriate to equate speculation or trading in a market with market inefficiencies.

Stock market businesses around the world survive because of both investment and speculation revenues.

As long as severe (and detrimental) market manipulation is curbed, speculation is a healthy activity.

Nevertheless, the capital market's granting of decision-making based on commitment (shares held) must be strictly adhered to.

The dual-class shares concept of allowing more voting rights for certain categories of shares attracts more companies to list in Singapore, as their founders are given better control of the potentially listed firm.

But reaping funds from members of the public without giving them their right to decide simply goes against the basic premise of a capital market.

Jimmy Ho Kwok Hoong

President
The Society of Remisiers (Singapore)

A version of this article appeared in the print edition of The Straits Times on May 19, 2017, with the headline 'Lunch breaks, wider bid sizes good for market'. Print Edition | Subscribe