Singapore Exchange and MAS, the city state's de facto central bank, have decided to go ahead and introduce a minimum trading price for Mainboard-listed stocks to address risks associated with low-priced securities and to improve overall market quality.
"Given the strong public support for the requirement, SGX will proceed to set a minimum trading price of 20 cents for Mainboard stocks," said the bourse operator in a statement.
SGX said a one-time transition period of 12 months from the date of introduction of the minimum trading price requirement will be given to affected issuers to undertake corporate actions to meet the new requirement.
“Those which are unable to meet the requirement after the 12-month transition period will be placed on a watch-list. Issuers which are unable to take steps to raise its minimum trading price and exit the watch-list will be delisted after a 36-month cure period,” says SGX in a statement.
SGX is consulting the public on operational details of the minimum trading price requirement. With the introduction of the minimum trading price requirement and its designation as one of the criteria for entry into the watch-list, SGX is also proposing adjustments to the existing watch-list framework to better rationalise the existing watch-list criteria with the minimum trading price entry and exit criteria.
SGX plans to introduce the minimum trading price requirement and adjustments to the existing watch-list requirements by March 2015, and for them to take effect from March 2016.
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