Singapore will implement wide-scale reforms to its equity market rules following a penny-stock scandal last year, its central bank and stock exchange announced on Friday. After a three-month public consultation process that ended on May 2, the Monetary Authority of Singapore (MAS) and Singapore Exchange Ltd (SGX) agreed on a number of changes including minimum trading prices, new collateral rules, short-selling reporting, and new independent committees to examine listing applicants and impose regulatory sanctions.
From March 2015, Singapore will have a minimum trading price of S$0.20 ($0.16) for main board-listed issuers and a transition period of 12 months.
The new rules will impact about 220 companies out of about 800 listed on SGX, but regulators expect most companies to comply through "share consolidation" during the transition period, after which there will be a grace period of three years.
"This is to address risks of low-priced securities being more susceptible to excessive speculation and potential market manipulation," MAS and SGX said in a statement.
SGX is the front-line regulator of the city-state's stock market as well as its commercial operator. "Ultra penny stocks" trade for as little at S$0.001 on its smaller Catalist exchange.
The wide-ranging proposals, due to be implemented over two years, are aimed at promoting orderly trading, improving transparency and strengthening the process for admitting new listings and enforcing against rule breaches.
SGX has seen a drop in trading volume since October when shares in three companies - Blumont Group Ltd, LionGold Corp and Asiasons Ltd - crashed and wiped out about S$8 billion in value in just two days after huge run-ups in their share prices.