SGX’s Bocker wants board lots phased out

Singapore Exchange (SGX) chief executive Magnus Bocker has pledged his commitment to eventually do away with board lots, and has spoken up for retail participation and sustainability as he outlined strategies to address lacklustre markets.

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SGX’s Bocker wants board lots phased out

Kenneth Lim
26 September 2014

Singapore Exchange (SGX) chief executive Magnus Bocker has pledged his commitment to eventually do away with board lots, and has spoken up for retail participation and sustainability as he outlined strategies to address lacklustre markets.

The minimum number of shares that investors can trade in a lot will shrink to 100 shares in 2015, from 1,000 now.

Speaking on Thursday, Mr Bocker said the exchange plans to go even further: “For those who are wondering, rest assured we are committed to a unit-share market. We just need to take it one step at a time.”

Improving retail participation is also a priority for the exchange, which saw stock market trading volume drop 22 per cent during the year ended June 2014, he said.

He noted that only about 8 per cent of the potential investor population in Singapore actively trades stocks, about half the rate in Australia and one-third that in Hong Kong.

Mr Bocker emphasized SGX’s focus on improving market quality, with a number of regulatory proposals such as minimum Mainboard share prices in the pipeline. He also urged listed companies to address sustainability.

“We, like much of Asia, lag behind the US and Europe when it comes to dealing with sustainability and sustainability reporting,” he said. “We need to fundamentally change the way we promote sustainability among our listed companies.”

Beyond the stock markets, SGX continues to develop new derivative products to diversify its business.

New futures products for Chinese renminbi, Japanese yen, Thai baht and electricity are expected to be launched “in the not-too-distant future”, Mr Bocker said.

T. K. Yap, head of institutional business at OCBC Securities, said a unit-share market can benefit more than just retail investors; traders who deal with basket products, for example, will enjoy greater precision. “They need to be able to trade in smaller board lots to reduce both tracking error and implementation shortfall to replicate the index more precisely,” he said.

But board lots that are too small can exact a cost on issuers and make it less attractive for smaller companies to list in Singapore.

Mr Yap said: “For the listed company, it can become very costly to fulfil obligations to a large shareholder base comprising many shareholders holding very few shares each.”

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