SINGAPORE - The Singapore Exchange (SGX) will mandate all mainboard IPO companies to allocate to retail investors at least 5 per cent, or S$50 million, whichever is lower, of their offer size.
The introduction of the minimum IPO allocation is aimed at facilitating greater retail participation in Singapore's equities market, SGX announced on Tuesday morning (March 8).
The new rules on the minimum allocation take effect on May 2, 2017.
"Retail investors are important participants in the Singapore markets and giving them access to at least 5 per cent of each mainboard IPO will encourage more to consider equity investing," said Mr Chew Sutat, SGX executive vice-president and head of equities and fixed income.
"If market conditions permit, we encourage companies to make available more shares than the floor to retail investors," he said.
Mr David Gerald, CEO and president of the Securities Investors Association (Singapore), said: "Ensuring a minimum allocation to retail investors for every Mainboard IPO is a step in the right direction. This initiative provides individuals especially newcomers with more choices when considering ways to diversify their savings."
SGX received formal feedback from 20 respondents via the public consultation which ended in March 2016. Informal engagements with stakeholders were also held to gather feedback.
"We recognise that market forces are dynamic and will continue to monitor the public subscription trends of IPOs to ensure that the minimum allocation amounts are appropriate for the Singapore market," Mr Chew said.