OREANDA-NEWS. February 11, 2015. Singapore Exchange’s (SGX) introduction of a minimum trading price (MTP) for Mainboard companies is aimed at improving the quality of the Singapore stock market; higher-priced shares have better liquidity, lowering transaction cost for investors. Such shares are also less susceptible to speculation and market manipulation.

SGX will introduce MTP of S\\$0.20 a share on 2 March 2015. The MTP requirement will only be effective after a one-year transition period ending on 1 March 2016, which means there is no immediate impact on companies. The first batch of companies which do not comply with MTP then will enter the SGX watch-list. These companies will have a 36-month period up to 28 February 2019 to comply. To do so, companies can consolidate their shares thereby increasing their share prices. Other possible options are a transfer to Catalist which has no MTP requirement, or taking other corporate actions.

SGX has actively engaged with companies since March 2014 to help them prepare for compliance with the MTP requirement. Of the companies which may be affected, more than 80% have indicated that they were prepared to undertake some form of corporate action, including share consolidation, to comply with the MTP requirement. To support companies, SGX will waive fees for MTP-related share consolidation for two years effective 2 March 2015, and has developed a comprehensive checklist, a guide to MTP, as well as frequently-asked questions, all of which are available on www.sgx.com/mtp for companies and retail investors.

Concurrently, SGX continues to hold in-depth briefings and one-on-one meetings to provide information and guidance to companies on share consolidation and other corporate actions.

“The MTP requirement, together with recent initiatives, is crucial to ensuring a quality Singapore stock market. We urge companies to take action as soon as possible to comply with MTP. Share consolidation would be the most practical option and companies with AGMs in April 2015 should leverage on convening an EGM on the same date, to obtain shareholders’ approval of the share consolidation. Others may consider transferring to Catalist, a sponsor-supervised regime and a value proposition for high-growth companies,” said June Sim, Head of Listing Compliance at SGX.

In addition to MTP, initiatives to improve the stock market in the past 12 months include the introduction of circuit-breakers (February 2014), the revision of the clearing fee (June 2014), the addition of liquidity-providers and market-makers (June 2014), and the reduction in the board lot size to 100 shares (January 2015). SGX has also, since late 2014, stepped up its engagements with brokers on improvements in stock market efficiencies, governance and financial literacy.

For more details on MTP, please see www.sgx.com/mtp.