Post by oldman on Feb 8, 2014 5:43:38 GMT 7
I especially like the enhancement highlighted in red below. As for the rest of the suggestions in this link, I am not convinced of their effectiveness: infopub.sgx.com/FileOpen/20140207_Joint_Annct_MAS_SGX_propose_measures_to_strength_securities_mkt.ashx?App=Announcement&FileID=273774www.mas.gov.sg/~/media/MAS/News%20and%20Publications/Consultation%20Papers/Review%20of%20Securities%20Market%20Structure%20and%20Practices
7 February 2014 SGX enhances regulatory tools
Singapore Exchange (SGX) is enhancing its regulatory tools in line with international standards, by
refining its query process and adding new requirements.
As one of the few exchanges which conduct real-time surveillance of trading activities and issue real-
time queries to companies on unusual trading activities, SGX regularly enhances its regulatory tools.
This latest series of enhancements also follows a joint review with the Monetary Authority of
Singapore (MAS). The enhancements, which are effective 3 March 2014, comprise:
a) Enhancement to the public query process by:
(i) providing further guidance and details in the public query; and
(ii) requiring the company’s board of directors to approve the company’s reply to SGX’s query;
b) Publication by SGX of a “Trade with Caution” announcement whenever companies are unable to
explain the trading activities which SGX is querying;
c) Requiring companies to notify SGX of discussions or negotiations that are likely to lead to a
takeover, reverse takeover or a very substantial acquisition. These companies are also required to
keep a list of names of persons privy to the transaction.Enhancements to the public query process
(i) When unusual trading activity is detected in a stock that cannot be explained by
existing public information or prevailing market conditions, SGX will issue a public
query to the company regarding the unusual trading activity in its stock. Such a query
aims to extract yet-to-be disclosed price-sensitive information from the company that
can explain the unusual trading behaviour in its stock. Public queries also serve to
alert investors to trade with care given the unusual trading activities observed in a
SGX will enhance its public query by providing examples as a guide, of yet-to-be
disclosed information that could explain the trading patterns. An example of the new
template for the query to all listed companies is available in the Frequently Asked
Questions (FAQs) at this link.
(ii) Currently, when companies are publicly queried on unusual trading activities in their
stocks, most companies will seek the Board of Director’s (“Board”) approval in their
responses. This is a good practice and should be codified. Moving forward, SGX will
require all companies to have their replies to SGX approved by the Board. The
company must state in their response to SGX that the Board’s approval has been
obtained. This will establish accountability for the companies’ responses. The relevant
SGX Practice Note 7.2 for Mainboard companies is found here. The Practice Note 7B
for Catalist companies is found here.
b) Publication by SGX of a “Trade with Caution” announcement
SGX will introduce a “Trade with Caution” announcement in instances where a company is
queried by SGX and replies that it is unaware of any reasons for the unusual trading activities
observed in its stock. This announcement from SGX will remind investors to be cautious when
trading in that company’s stock. It will also serve as a warning that the trading activities in that
company’s stock could be caused by market forces other than the corporate developments of
the company. c) Notifying the exchange on specific transactions and privy persons
Companies have a duty to keep material information confidential, and to monitor the trading
activities of their stocks closely. During the course of market surveillance, SGX has observed
instances where a stock price moved before a material announcement. This could indicate a
possible information leak.
In support of closer monitoring of trading activities, companies will be required to notify SGX
where its Board is, either aware of discussions or negotiations of a potential proposal, or in
discussion or negotiation on an agreement or document which may lead to a takeover, reverse
takeover or a very substantial acquisition by the company. SGX will keep such notifications
confidential. This notification template will be available in SGX Practice Note 7.2 for
Mainboard companies and Practice Note 7B for Catalist companies from 3 March 2014.
Please click here for the notification template.
At the same time, the company will be required to maintain a list of names of persons privy to
the transaction. SGX may request the privy list as and when necessary. Listed companies
can refer to the “Privy List Template” which will be available in both SGX Practice Note 7.2
and Practice Note 7B from 3 March 2014. Please click here for the Privy List template.
Other regulatory tools – Suspension and Designation
SGX has the authority and powers to suspend and designate a stock. These two tools are used
sparingly in exceptional cases where anomalies in trading are observed, in order to protect the
interests of the market.
SGX has published FAQs on its website regarding the use of its regulatory powers to suspend and
designate a stock. The FAQs are found here. SGX will continue to highlight the restrictions and where
appropriate, provide clarification to the market of the decision it undertakes.
It is important to note that when such regulatory tools are deployed, the designation or suspension will
be ended as soon as possible to minimise disruptions to the marketplace.
Post by zuolun on Feb 19, 2014 15:46:01 GMT 7
The SGX and MAS is about to introduce some new ruling to curtail the risk in stock trading. They are going to limit contra period and set minimum price etc. The new rulings were welcomed by SIAS.
Will the new rule really help to curtail the risk in stock trading or are they introduced just to satisfy the public about doing something about the Blumount, Asiaon and LionGold (BAL) sage? Have these measures to be introduced will prevent another BAL sage? Are they assuming that the public is blinded? I wondered.
"Clients are worried that the authorities will clamp down very hard on speculative punting and shift the goal posts after the game has started."
— 19 Feb 2014
Coutts sues Blumont chairman for S$19.9m
- 19 Feb 2014
NEO Kim Hock, executive chairman of Singapore commodities company Blumont Group, has been sued by Coutts & Co, taking the sum banks and brokers are seeking to recover from an October crash to at least US$140 million.
Don't put too much money into penny/micro penny stocks anymore; focus on big & mid-cap blue-chip stocks instead.
Currently, only a handful of participating players in the "ABL" saga (mainly ang moh brokerage firms) who were directly involved had publicly reported their losses.
But the rest remained dead silent on how much they had lost (including foreign supporting/agent firms who need to buy/sell SGX-listed shares via MAS approved & licensed foreign/local brokerage firms).
The aftershock/rippling effects of the S$8 billion (US$6.4 billion) losses from the "ABL" saga may be damaging and unimaginative; the initial negative impact — Singapore Equity Trading Plummets on Penny-Stock Curbs.
Based on Blumont alone; under nominees a/cs, local brokerage firms involved are UOB, POEMS, OCBC... pertama.freeforums.net/post/1487
Post by zuolun on Feb 19, 2014 16:29:46 GMT 7
I too think that the players are smart people. They will surely find ways around to protect their rice bowl. I think for retail investors, we don't have to worry too much as there will always be a game in town..... worse come to the worse, there will be games elsewhere.
Local brokering firms with huge retail-based clients have already lost a big chunk of their "bread-and-butter" business after the BAL saga.SGX - There is no elephant in the room
— 17 Feb 2014
Since the announcement of the consultation paper and some proposals by MAS and SGX, there were a few familiar quips by the stakeholders. We do not want the SGX to be turned into a casino. Now who is talking? Is there an elephant in the classroom? They could not see it, didn’t recognise that the big mass is an elephant and pretending that not to see the elephant?
How fake or how stupid can things be when no one seems to notice the elephant in the classroom? And an article in the ST on Saturday had this title, ‘Few quibbles over collateral proposal for contra trades’. The introduction of collateral for contra trades is perhaps the biggest thing in the consultation paper and is going to be done for the purpose of reducing exposure and risks of broking houses and remisiers and to strengthen the trading system.
One thing for sure is to hasten the demise of a dying stock market when this measure is implemented. The 5% collateral for all outstanding positions would be a callous sledgehammer smashing down on any tiny nail heads protruding. There would be many procedural problems that would make this recommendation impractical. But top most is that it is not dealing with the real problem but creating new problems. Some refinement is needed and remisier Alvin Yong came up with a logical and practical proposal, to apply the collateral only to trades above the value of $50k. It is the big contra positions that would hurt the remisiers and the brokerages, not the small positions of the small traders. And given the limited size of active traders, such an across the board ruling will simply keep the small traders from trading when their participation is badly needed in a stockmarket with no players except computers.
If MAS and SGX want to bring the stock market to a pre mature and early demise, this is the way to go. Impose the collateral indiscriminately and the last few remaining small traders will say goodbye to punting in the market. Yes they are gambling, but in a small way and with manageable and tolerable risk. It is the big churnings of computer tradings and big time speculators that are raising the risk level in the industry. They should be the targeted group for this 5% collateral. They pose huge credit risk, not the small investors and punters. They are the really gamblers, with the help of a system that is designed for them to gamble.
Is there an elephant in the room? Anyone wants to look at the elephant or choosing to look the other way and spray their little water pistols wildly at shadows? It does not need much intelligence to notice the elephant in the room.
PS. Goh Eng Yeow also wrote a piece in today’s ST explaining why forcing small traders to put up collaterals is skirting the real problem caused by big positions. Come on, who are MAS and SGX kidding, to want small traders to put up collaterals even for trades of $1000 or $10,000 exposure? Would it solve the gigantic loss problem or would it kill the market when small retail traders just stay away, like the removal of teletext on TV?
....................................................................................................................................................................................................................................MAS and SGX propose measures to strengthen the securities market
— 10 Feb 2014
‘The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) today released a joint consultation paper setting out proposals to strengthen the securities market in Singapore.
The proposals follow an extensive review by MAS and SGX of the securities market in Singapore. The review concluded that while the securities market remains sound, there were three areas for improvement:
• promoting orderly trading and responsible investing;
• improving the transparency of market intervention measures; and
• strengthening the process for admitting new listings and enforcing against listing rule breaches.’
It is timely that MAS and SGX finally find a need to take a look at the health of the stock exchange and are inviting feedbacks on what needs to be done to make the stock market a more resilient and sustainable institution for the long haul. The objectives of this exercise are posted above, copied from SGX.
For all intent and purpose, this is a move in the right direction, a sign that things are not doing well and to take a serious look at the problems before it falls apart. On the other hand, this exercise tells another depressing story. The proposed changes and the need to ask the layman public on such serious and technical issues that require the technical knowledge of experts and thinking people in the industry says that MAS and SGX do not know what is wrong with the stock market. It is doing fine, just a little cosmetic changes and it will look pretty again.
Or, it may be that they know what is wrong but are turning the other way, not wanting to face the uncomfortable truth and wishing that everything is fine. There is no elephant in the classroom.
The public, even the stakeholders, if they are not willing to put on their thinking caps to look seriously into the problems that led to the current pathetic state of the stock broking industry would at best scratch the surface of a systemic problem and would make a few cursory or casual remarks and suggestions and thinking the problems will go away. From my experience, many are still totally ignorant of what is happening and the real causes of the failing market.
The stock market is in the critically ill stage and needs immediate resuscitation if it is not to collapse into a coma. And the proposals made by MAS and SGX are not encouraging. It is like a patient dying of syphilis and the doctors are recommending treatments for measles, for acne, and for insect bites. Unless MAS and SGX are serious to want to save the stock market from its certain demise, this exercise would be a waste of effort and time.
To be able to come up with effective measures to save the stock market, it is paramount that they know what is wrong with the market. What are the causes that are contributing to a market in distress. If they are chasing after the shadows, what good would come out of it? If they don’t even know what is wrong with the market, what is there to do to right the wrongs?
Another very important factor that can make this exercise real, if real solutions and tough measures are to be taken to revive the market, is professional expertise. You need people who know what they are saying, to know what is wrong and what needs to be done, and most of all, have the credentials and authority to tell the SGX that these things must change. Recommendations made by the public, or the stakeholders, could simply be ‘pooh pooh’ away by the SGX for obvious reasons and by the authority vested in them as the incumbent officials. They would flash their badge of professionalism and expertise and simply claimed that they know best and what they are doing are the best, and nothing meaningful will be accepted. Who is in a better position to go against the gods?
What can the other stakeholders do when authority and power are vested in the office bearers at SGX to make them change a flawed system?
The MAS should engage foreign experts that have the knowledge and authority to tell the SGX what needs to be done to save the industry. Here we are talking about real talents, people like Paul Volcker and the critics of the NYSE, of how the NYSE has been turned into a scam, a casino instead of a stock exchange. The western model stock markets, including SGX, are no longer stock markets for investment but for pure gambling, not even for speculations.
Now who is saying that we should not encourage a gambling mentality in the stock market when the stock market has been redesigned into a casino? There is no elephant in the classroom if one does not want to look at it.
This is just my general comments on this exercise. I will submit my views on what is wrong and what needs to change, and I will submit it to MAS and SGX even knowing that it would likely end up in the thrash bin. No one, not even the broking houses, would be in any position to make serious and important changes to the right the wrongs in the stock market if the authority in MAS and SGX do not want to see the wrongs and do not want to make changes to a system they think is doing fine.
For real changes to be effected, you need the pros that could speak to the MAS and SGX on equal terms and have the clout and confidence to make them do the right changes against their objections. The govt must spend this money if they do not want to see the worse from happening.
The few proposals put up by MAS/SGX would have little impact on the general health of the stock market, and some would actually hasten its demise if implemented. It just shows the level of thinking and understanding of what is happening to the stock market. They are refusing to remove the blinkers and are trapped in an old mindset programmed by the so called experts, to see and say the right things that are really frivolous.
Post by zuolun on May 12, 2014 6:52:58 GMT 7
Singapore maintains tight monetary policy
— 14 Apr 2014Should Singapore retain tight monetary policy even if economy skirted recession?
— 19 Oct 2012Is monetary policy enough to fight inflation in Singapore?
— 16 Apr 2012Singapore avoids recession with Q1 growth
— 13 Apr 2012Inflation And Monetary Policy
— 13 Oct 2010Monetary Policy Vs. InflationIs monetary policy enough to fight inflation?
By Aaron Low
14 Apr 2012
IN 2008, Singapore's inflation rate climbed to a 30-year high of 6.6 per cent.
To contain rising prices then, the Monetary Authority of Singapore (MAS) tightened monetary policy and allowed the Singdollar to appreciate. To be precise, it allowed an unusual one-off jump in the Singapore dollar's value.
This made the price of imports in Singapore instantly cheaper. Since 2008's inflation was fuelled by sky-high food and energy prices, it worked remarkably well to bring down inflation.
Yesterday, in response to a higher inflation forecast for the year, MAS again tightened monetary policy, allowing the Singdollar to appreciate at a faster rate.
Will monetary policy be as effective in 2012 as it was in 2008?
The answer is probably no. That's because the nature of inflation today is somewhat different from what it was four years ago.
Yes, imported cost pressures are still high, owing chiefly to the high oil prices amid tensions in the oil-rich Arab world. So a strong Singapore dollar will help cushion the impact of rising oil prices and other imports on Singaporeans.
But this time, higher prices are also being driven by domestic cost pressures that have little to do with imports or the value of the Singdollar overseas.
Yesterday, MAS flagged the tight labour market as one potential reason why 'core inflation' (that is, minus the cost of accommodation and cars) is going up this year. This is because higher labour costs - partly the result of the Government tightening the tap on cheap foreign workers - are clearly passing through to many sectors of the economy.
Health care, education and recreation have all seen faster price increases in recent months, largely due to the fact that these services are still relatively labour-intensive.
Tightening monetary policy will have much less of an effect on this source of inflation.
What is worrying is that these domestic price pressures will probably remain for some time to come, reckons DBS economist Irvin Seah.
'Cutting labour supply and raising foreign worker levies, as part of economic restructuring, will add to cost pressures as firms will not be able to raise productivity in the short run,' he says.
Another source of inflation is land. Going by anecdotal evidence, businesses are facing rising rentals. This is another domestic driver that the exchange rate policy has little effect on.
To be sure, the stronger exchange rate can still work through indirect means to combat domestic inflation.
Citigroup economist Kit Wei Zheng notes, for example, that a higher exchange rate will work to dampen external demand for Singapore's goods and services, which may help ease domestic demand for labour and land.
'For instance, in the tourism sector, with a stronger Singdollar, we become less attractive to tourists, who may then prefer to go to, say, Malaysia,' he explains.
But these secondary effects take much longer to come through the system, and some say it is questionable if they will happen at all.
At the same time, there are other secondary effects to contend with, working in the opposite direction.
A stronger Singdollar also attracts foreign inflows of capital, for example. This increases the money supply and raises asset prices.
What all this means is that, looking at where we are in 2012, monetary policy alone cannot be the only weapon in the tool kit to combat inflation. Other strategies to bring down prices will have to be applied in tandem.
The Government has already moved to cool foreign capital inflows in the property market through the introduction of the additional buyer's stamp duty, which targets foreigners directly.
A greater supply of land for residential and industrial property will also help to dampen prices and rentals in the next few years, says Bank of America Merrill Lynch economist Chua Hak Bin.
The Government may need to look more closely at business rentals next, and even the fees and charges it levies on businesses and consumers.
Unlike in the past, inflation will not go away with a quick fix. Policymakers will have to fire on more cylinders if they are to effectively deal with the problem of fast-rising prices in the months and years ahead.
S$: MAS fighting yesterday’s battles?
17 Apr 2014
“Maginot Mentality” a term that is a byword for leadership who takes comfort in the past, unable to recognize fundamental changes had taken place. On Feb 14th after its monetary policy review, the MAS announced the gradual appreciation of the S$ remained the “appropriate policy stance”. The writer wonders if policy-makers are afflicted by their own “Maginot Mentality” – overly comfortable with ultra low interest rates, unable to recognize that the ground had shifted. Given the S$ correlation to US interest rates, the MAS may well be fighting yesterday’s battles when the Federal Reserve eventually raise rates, thereby rendering MAS’s policy ineffective or even counter-productive.
MAS policy targets a gradual appreciation of the S$ Nominal Effective Exchange Rate (NEER) which represents the undisclosed trade weighted value of S$ in relation to Singapore’s main trading partners. It is meant that the NEER should be strong enough to control imported inflation, thus supporting economic growth. Until 10 years ago, targeting an appreciation of the NEER kept inflation in check. But things began to go awry from 2005 onwards.
The above chart shows the cumulative year by year increase in inflation (blue) and the cumulative appreciation of the S$ against trade weighted index as a proxy to NEER (red). You can see that inflation start to accelerate in 2007 but throughout the 10 year period, the NEER has appreciated almost in lock step with inflation. However, this should not be the case since the appreciation of the NEER is meant to curb inflation. In addition, since 2008 the 1 year deposit rate (green) flat lined close to 0.5% and the 10 year bond yield (grey) averaged 2.5%. By relying solely on NEER appreciation, MAS had produced negative real interest rates by mimicking the monetary conditions from the West despite the absence of their problems of low growth, high unemployment and potential deflation.
Why did the NEER appreciation failed to curb inflation? The answer is the FT policy which flooded the economy with foreign workers and the Profit Maximization Strategy which work hand in glove with the latter. Transport costs (Goods Vehicle and Bus COE +500%), real estate (Residential +89%, Industrial +138%) and rents (+52% last 4 years), among others, have driven inflation to an extent that any disinflationary benefit from the appreciation of the NEER has been overtaken. Negative real interest rates caused homebuyers to over-estimate affordability, developers to bid up land prices, businesses to over-expand, unproductive ones to thrive, banks lending too much and large companies to overpay for acquisitions. This created far greater demand for resources than the economy can cope. The present policies caused the Singapore economy to grow well above the rate it could naturally sustain, are inflationary and the root cause of unaffordable housing, high cost of living and poor returns on savings.
The NEER policy alone cannot curb these excesses as the link between the NEER and inflation may be irretrievably broken by present government policies. The writer suggests the MAS apply interest rate targeting to guide the economy along a sustainable growth path. In any case, the S$ will be weakened by higher US rates which would worsen inflation. This will force the MAS to raise interest rates belatedly when it should act preemptively to forestall risks.
The role of central banking had been famously described as “taking away the punch bowl just as the party gets going”, i.e. raise interest rates when growth is too strong in order to balance the risks and trade-offs in the economy. When interest rates overtake inflation, the unnatural speed of the economy will slow. Uncompetitive industries such as those on low productivity and addicted to labour inputs tend not to survive in such monetary conditions. The creative destruction improves the economy’s productivity by ridding it of excessive labor reliance and resource usage. Higher rates enforce discipline on pricing since cost of financing is no longer cheap. Citizens’ savings and CPF earn a real return and will not be sacrificed for low financing costs to the business and corporate sector.
Unfortunately, the MAS’ role is to support government policies, not to lean against economic risks and excesses by acting according to its own judgment on growth and inflation. However, monetary policy is too important to be left to politicians who by nature tend to favour one part of the electorate over another according to ideology.
It is for this reason that central banks, an indispensable check and balance in advanced countries, are free from political control. Singapore lacks such diligent niceties which stand in the way of the growth at all costs strategy. But the institutional lack of check and balance has heightened risks to economic stability due to inflation, elevated property prices, excessive bank lending, among others. An early rise in interest rates back in 2011-2012 would have lessened these risks. This is all the more ironic given the government’s “foresight” in “long term planning”.Chris K* The writer has spend his entire career in managing balance sheet currency, interest rates and liquidity risks. As such, determining the direction of central bank monetary policy is a crucial element of his job.
Post by zuolun on Aug 27, 2014 6:58:40 GMT 7
SGX to cut board lot size from Jan 19 next year
26 Aug 2014
MARK this date - Jan 19, 2015. That's when retail investors will be able to start buying securities listed on the Singapore Exchange (SGX) in smaller lots of 100 units from 1,000 units currently.
In a statement on Monday, SGX said the reduction in standard board lot size of securities listed on the exchange from 1,000 to 100 units will make it more affordable for retail investors to invest in a wider range of equities.
"The reduced board lot size will benefit all investors and make it easier to invest in blue chips and index component stocks which tend to be higher-priced. It will also allow institutional investors to better manage their risk exposures through finer asset allocation of funds," said SGX chief executive Magnus Bocker.
SGX's move to cut lot sizes is also generally viewed as a safeguard measure in the wake of last October's penny stock crash. By making blue chip stocks more attainable to retail investors, it is hoped that they will invest more in these safer counters than load their portfolios with relatively more risky, lowly-priced shares.
As a result of the change, a minimum subscription and allocation value - S$500 for mainboard counters and S$200 for Catalist counters - will be imposed on investors applying for shares offered during the initial public offering (IPO).
"This is to address the possibility of disproportionately high trading costs that may be incurred by IPO applicants who are allotted the minimum number of shares (one board lot of 100 shares) at the minimum issue price for IPO shares," said SGX.
For example, if a company is offering its shares at 50 Singapore cents a share, then the minimum an investor can subscribe for is 1,000 shares (S$500). If the share is being offered at S$10 a piece, then the minimum subscription allowed is for 100 units (S$1,000).
With this change, SGX said that companies now have discretion to set their own minimum subscription quantity, which must be in multiples of 100 shares.
This means that the minimum subscription quantity of shares may differ from one IPO to another, depending on the issue price for the IPO shares.
The new board lot size will apply to ordinary shares, including shares traded on GlobalQuote, real estate investment trusts, business trusts, company warrants, structured warrants and extended settlement contracts. Existing counters with board lot sizes of 100 or less units will remain unchanged.
The board lot sizes for exchange traded funds - except for SPDR Straits Times Index (STI) ETF and ABF Singapore Index Bond Fund for which the board lot size will be reduced to 100 units - American Depositary Receipts and fixed income instruments, including retail bonds, Singapore Government Securities and preference shares will remain unchanged.
Beginning in September, SGX will introduce a separate column - "BLot" - on the SGX website's price page to indicate the board lot size of each counter. With that, the board lot size will be removed from the counter names as practised now with the exception of sister counters and temporary odd lot rights counters. (Counters which do not have the standard board lot size of 1,000 units are currently indicated with the board lot size as part of the counter name, for example, Creative50.) In January next year, the "BLot" column will clearly indicate which securities have a board lot of 100 units.
SGX said investors can continue to trade in odd lots in the Unit Share Market.
However, once the board lot is reduced, the maximum quantity of units that can be traded in the Unit Share Market will be cut from 999 to 99 effective Jan 19, 2015.
Naturally, it's a move hailed by the chief of an investors grouping here.
"This is a much-anticipated move that will be welcomed by our citizens," said David Gerald, president and CEO of Securities Investors Association (Singapore).
"Now that blue chip stocks are more accessible, I would encourage retail investors to seriously consider share investing as a way to diversify their portfolio and grow their savings for retirement," he added.