Tuesday, July 05, 2011

SGX reduces bid size, cuts trading cost (Effective 4 Jul 2011)

Singapore Exchange (SGX) will reduce the minimum bid size for securities on 4 July 2011, leading to lower trading costs for investors.

The initiative is expected to lead to a tightening of bid-ask spreads by as much as 80%. As a result, Singapore will offer one of Asia’s most cost-competitive trading environments with an estimated $1.7 billion in annual savings, based on 2010 market turnover.

Mr Chew Sutat, Head of Securities at SGX, said, “This initiative addresses our customers’ need for more cost-efficiency and trading opportunities. Tighter spreads will encourage investors to increase their participation in SGX, the best market for accessing fast-growing Asia. This will in turn enhance liquidity here in Singapore.”

To cater to the narrowing of the bid sizes, SGX will widen the Forced Order Range for all securities to +/- 20 bids from +/- 10 bids across all price ranges. Forced Order Range is a pre-execution mechanism which helps investors to avoid error trades when entering prices of orders. Any orders outside the Forced Order Range must be confirmed by the use of the Forced Key function before those orders can be submitted.

The revised Minimum Bid Size and wider Forced Order Range will apply to all securities traded on SGX except exchange traded funds, loan stocks and bonds.

Please refer to Appendix 1 for details of the changes and Appendix 2 for an illustration of cost savings for investors.

-End-


Appendix 1

Details of the changes are as follows:

Securities
Price Range (S$)
Existing
New
Bid Size (S$)
Forced Orders (Bids)
Bid Size (S$)
Forced Orders (Bids)
Below 0.200.005+/- 100.001+/- 20
0.20 – 0.9950.0050.005
1.00 – 1.990.010.005
2.00 – 9.990.010.01
10 and above0.020.01

SGX is also revising the Minimum Bid Size for debentures.  Details of the changes are as follows:

Debentures
Price Range (S$)
Existing
New
Bid Size (S$)
Forced Orders (Bids)
Bid Size (S$)
Forced Orders (Bids)
All0.001+/- 300.01 or 0.001 as determined by SGX-ST+/- 30

Appendix 2

Cost savings to investors who buy or sell for an estimated $50,000 transaction:

Counters
No. of Shares*
Existing Spread
New Spread
Existing Spread Cost*
Savings ($)*
% Savings*
DBS
3,000
0.02
0.01
$60
$30
0.07%
Cosco
25,000
0.01
0.005
$249
$127
0.26%
Ossia
416,000
0.005
0.001
$1,637
$1,305
2.61%
STI 3150BNPeCW110629
294,000
0.005
0.001
$1,449
$1,155
2.31%
* Based on approximately $50,000 notional value

For CoscoCurrent bid/ask                       :           $1.95/$1.96
Revised bid/ask                      :           $1.950/$1.955 or $1.955/$1.960
Savings for buyer                   :           $127
Savings for seller                    :           $127
Total savings for investors      :           $254


» SGX reduces bid size, cuts trading cost | Singapore Exchange

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