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Asia Today ISSN 1861-4604 Thursday, April 19, 2018

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Singapore changes stock regulations following flash crash

Minimum price for mainboard shares

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SINGAPORE The city-state of Singapore has announced it will introduce a minimum price for mainboard shares and reduce the lot size for transactions after a USD $6.9-billion "flash crash" rocked the Singapore Exchange in October.

Singaporean regulators have been reviewing Singapore's stock market structure since Blumont Group Ltd. (BLUM), Asiasons Capital Ltd. (ACAP) and LionGold Corp crashed at least 87% over three days in October 2013. Southeast Asia's biggest bourse, SGX, added circuit breakers in February to protect investors from excessive price swings.

The city-state has announced it will impose a minimum trading price of USD S$0.20 to address risks of low-priced securities, or penny stocks, being more susceptible to excessive speculation and potential market manipulation, according to a joint statement by the Monetary Authority of Singapore and Singapore Exchange Ltd. (SGX).

Other new measures include collection of a 5 percent collateral and reporting of short positions.

Singapore's local "flash crash" was part of a wider problem in international stocks markets that make them vulnerable to a sudden spiral in value. In May 2010, more than USD $800-billion was erased from the value of US equities in minutes.

That incident prompted US regulators to implement a limit-up/limit-down initiative that prevents market makers from quoting shares at prices deemed too far above or below current levels.

According to the Singapore Exchange, the new steps will be implemented in phases over the next two years.

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