New Rules for Investing in the Singapore Stock Market

Singapore is bringing in tougher rules for its equity market to help restore investor confidence after a penny-stock slump erased $6.9 billion in market value from commodity companies over three days in October 2014.

Regulators will impose a minimum trading price of S$0.20 for mainboard shares because low-priced securities are more susceptible to excessive speculation and potential market manipulation, according to an Aug 1 statement from the Monetary Authority of Singapore and Singapore Exchange Ltd. (SGX). There are more than 200 listed companies on SGX’s mainboard whose shares trade at less than the S$0.20 minimum price requirement will have to meet the new criteria by March 2016. 

Investors will be required to lodge collateral worth 5 percent of trades and provide more information about short positions. The collateral rule will further enhance the robustness and resilience of our securities market and instil greater investor confidence.

It also plans to reduce the lot size of listed securities in January 2015 to 100 shares from 1,000 shares currently, MAS and the exchange said in the statement. The reduction will allow smaller investors to afford more expensive shares and also allow investors with previously insufficient capital to participate in the market much earlier. Liquidity in the market will be increased as a result and this is great news for Singapore investors. Also, investors will have the opportunity to reduce their risk by having a more diversified portfolio.