SGX proposes reducing lot sizes to make trading more affordable, such as for younger people

SINGAPORE - The Singapore Exchange is proposing to reduce the minimum amount required to invest in stocks and other instruments – a move that will make trading on the local bourse more affordable for investors, such as younger people.

This will be done by reducing the standard board lot sizes from the current 100 units to 10 for instruments above $10 and up to $100 and from 100 units to one unit for those priced above $100.

Besides stocks, the changes will also cover stapled securities, real estate investment trusts, business trusts, company warrants excluding special purpose acquisition company warrants, as well as depository receipts and depository shares.

In a consultation paper released by SGX on Jan 23, the exchange said the proposed move would make higher-priced stocks more affordable and accessible to investors, which could in turn broaden investor participation and increase trading activity.

Mr Ng Yao Loong, SGX Group’s head of equities, said that prices of some of the largest stocks trading on the bourse have increased substantially.

“Share prices of some of our largest stocks have risen significantly in recent years, and about 30 per cent of trading activity now comes from stocks priced above $10. This is the segment where we want to enhance accessibility and broaden participation,” he noted.

“By reducing the board lot size for these higher-priced stocks, we bring the minimum investment down from a few thousand dollars to just a few hundred – making such investments more within reach, especially for younger retail investors,” he added.

In determining an instrument’s price range and whether its board lot size should be reduced, SGX will assess whether the instrument’s last traded price or closing price has remained within the price range for the preceding six months, or is likely to do so in the future.

This comes as part of recommendations by the Equities Market Review Group set up by the Monetary Authority of Singapore in August 2024 to strengthen the development of Singapore’s stock market.

The consultation paper can be found at this

link

and members of the public have until Feb 13 to share their feedback.

The changes, if supported by the market, are expected to take effect in mid-2026, SGX said.

Analysts welcomed the proposed move, but some cautioned of drawbacks.

Mr Chawla Vikramjit Singh, director and head of securities (retail sales) at Phillip Securities, said that reducing board lot sizes should serve as a crucial catalyst for increased turnover.

He noted that recent record turnouts at Phillip Securities’ quarterly Singapore market outlook events pointed to strong investor optimism.

“The convergence of falling interest rates, increase in dividends and reduced entry barriers creates the perfect environment for a major expansion in retail trading,” he said.

UOB Kay Hian’s director of research Jonathan Koh said some sectors dominated by large-cap stocks missed out on the recent rally.

“The reduction in board lot size could hopefully spread the enthusiasm and liquidity to a wider range of stocks, benefiting both blue chips as well as small and mid-cap stocks alike.”

RHB Singapore’s head of equity research Shekhar Jaiswal said the proposal is a positive step towards addressing a longstanding retail pain point in Singapore equities, but warned that it could affect market quality.

“Increasing the number of small-sized tickets might fragment liquidity, leading to decreased visible depth or wider effective spreads at some counters if liquidity availability is not improved. The consultation phase enables SGX and market participants to align scope, safeguards and market-making procedures to improve accessibility without disrupting orderly trade.”

Mr Jaiswal added that lower barriers to entry may not fix structural problems.

“While lower entry tickets are beneficial, they do not address structural issues such as the initial public offering pipeline, competition from alternative trading platforms, or the scarcity of high-growth, benchmark-type listings that drive turnover and valuations,” he said.

But the proposal does complement existing MAS and SGX initiatives like EQDP (Equity Market Development Programme), which aim to improve research coverage, unlock value in listed names, and expand the investable universe, Mr Jaiswal added.

Morningstar director of Asia equity research Lorraine Tan said the move should improve access for new and young investors, but Singapore must ensure that the IPO pipeline and general company quality can grow and maintain long-term investor interest.

Separately, arising from a regular review of the stock market structure, SGX is also proposing to remove the requirement to align the minimum bid sizes of securities and futures contracts traded in Hong Kong dollars, renminbi or Japanese yen with those in their home markets.