After rigorously consulting the public regarding the introduction of minimum IPO allocation, Singapore Exchange (SGX) will mandate all Mainboard IPO companies to allocate at least 5% or S$50 million, whichever is lower, of their offer size to retail investors.
The new rules, which come into effect 2 May 2017, are aimed at facilitating greater retail participation in Singapore’s equities market.
Commenting on the move, Chew Sutat, Executive Vice President and Head of Equities and Fixed Income at SGX, said: “Retail investors are important participants in the Singapore markets and giving them access to at least 5% of each Mainboard IPO will encourage more to consider equity investing. If market conditions permit, we encourage companies to make available more shares than the floor to retail investors.”
Mr. Chew added that SGX will continue to monitor the public subscription trends of IPOs to ensure the minimum allocation amounts are appropriate for the country’s market.
David Gerald, CEO and President of the Securities Investors Association (Singapore), commented: “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 choice when considering ways to diversify their savings.”
SGX consults public on proposed equities market structure adjustments
In addition to the minimum IPO allocation announcement, SGX will be asking members of the public for their thoughts on proposed adjustments to equities market structure that include a minimum bid size, a forced order range, and a change in trading hours.
SGX is proposing an increase in the minimum bid size for stocks and relevant securities trading in the S$1 to S$1.99 range, from the current S$0.005 to S$0.01. This comes in response to a decline in traded value in the S$1.00 to S$1.99 price range in recent years and lower retail participation in this particular price range relative to others.
SGX also proposes widening the forced order range from the current +/- 20 bids to +/- 30 bids, to improve order entry efficiency.
As for trading hours, the mid-day break would take place from 12.00pm to 1.00pm. Market participants would still be able to enter and manage orders while SGX publishes an indicative equilibrium price (IEP).
Loh Boon Chye, Chief Executive Officer at SGX, said: “We recognise that the three proposed changes will affect segments of the market differently. We look forward to an active participation in the public consultation and collectively working towards a common goal of enhancing the equities market. We will continue to calibrate and implement initiatives that we believe are for the long term interests of a vibrant and resilient market.