In October last year, the shares of Blumont Group, Asiasons Capital, and LionGold Corporation fell significantly, with all three companies losing almost all their value overnight.
In its introduction to the consultation, the MAS said it conducted a review following the “unusual trading activities” in the three stocks and said it had also noted “increased volatility in certain segments of the market following the event”.
The MAS said, while the review, which it conducted jointly with the SGX, concluded the securities market remains sound, there is scope for improvement in three key areas: promoting orderly trading, improving the transparency of market intervention measures, and strengthening the new listings process and enforcement actions against listing rule breaches.
In order to achieve this, the MAS and SGX have proposed establishing an independent listings advisory committee, a listings disciplinary committee, and a listings appeals committee.
Lee Chuan Teck, assistant managing director, capital markets, MAS, said: “These changes have to be viewed in the context of a securities market that is fundamentally sound.
“A recent assessment by the International Monetary Fund affirmed that our securities market’s compliance with international standards is generally high, and Singapore’s regulations are among the best in the world. This consultation allows us to have a conversation with all stakeholders on how to make the market stronger and more mature. We will consider all views carefully before making any decision.”
With the aim of “promoting orderly trading”, the MAS and SGX have also proposed setting up a minimum-trading price for a stock, imposing collateral requirements on stock trading, and reporting short-sale positions.
Noting that low-priced securities are normally more prone to speculation and “possible” manipulation, the regulators said setting up a minimum trading price might curb the volatility.
Magnus Bocker, chief executive, SGX said: “This joint consultation and enhancements to SGX’s regulatory tools encompass structural and regulatory aspects crucial to a well-functioning securities market. Today’s world is fast-changing and we need to strengthen Singapore’s securities market to meet the expectations of investors and companies.”
The paper “Review of Securities Market Structure and Practices” is open for public comments until May 2.
SGX had said in January it will introduce circuit breakers in the securities market from February 24 as an additional market safeguard.