Higher threshold of $500,000 and earlier reporting meant to enhance transparency
By Y JAMIE LEE 21 January 2009
The Singapore Exchange (SGX) has proposed a two-pronged approach to toughen requirements for married trades - in a bid to enhance market transparency.
The first approach in its proposed revisions to the requirements for direct business trades - also known as married trades or, to some, as off-market deals - involves raising the thresholds for such trades to $500,000 from $150,000, or 500,000 units of securities or futures contracts from 50,000 units.
Secondly, SGX has suggested that married trades executed after trading hours must be reported in the first 20 minutes of the next market day’s opening routine - that is, from 830am to 850am. Currently, trading members are allowed to report within the first half-an-hour of trading - that is, from 9am to 930am.
SGX - which is seeking public views on these amendments - has also asked for comments on whether direct business trades should be subject to price guidance, such as whether the transacted price should fall within a specific range of the security’s price on the previous or the current market day.
If there is a need for a price guidance, SGX is interested to know what it should be (e.g. within a certain percentage or a spread of the security’s price). Brokers said that SGX would query trades done at more than 10 per cent difference to the last transacted price.
The changes could deter retail investors from dealing in such block trades and limiting them to institutional plays, said brokers.
Married deals have been seen as one possible way to ramp up the stock volume and create a false scenario of active play, said one broker from Kim Eng Securities, adding that this could make captured stock movements more accurate.
‘Married deals could be seen as a form of market manipulation,’ said another broker from a local bank. ‘It gives an artificial impression of the counter,’ adding that the proposed changes could raise market transparency.
This could also be a way to raise efficiency by limiting the number of block trades that needs to be reported to the exchange, said the dealer from Kim Eng, though he said that he has not seen a surge in married deals recently.
SGX said that with the increased efficiency of trading on the exchange, the need for block trades is expected to be reduced.
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SGX Proposes Tighter Rules for Married Deals
Higher threshold of $500,000 and earlier reporting meant to enhance transparency
By Y JAMIE LEE
21 January 2009
The Singapore Exchange (SGX) has proposed a two-pronged approach to toughen requirements for married trades - in a bid to enhance market transparency.
The first approach in its proposed revisions to the requirements for direct business trades - also known as married trades or, to some, as off-market deals - involves raising the thresholds for such trades to $500,000 from $150,000, or 500,000 units of securities or futures contracts from 50,000 units.
Secondly, SGX has suggested that married trades executed after trading hours must be reported in the first 20 minutes of the next market day’s opening routine - that is, from 830am to 850am. Currently, trading members are allowed to report within the first half-an-hour of trading - that is, from 9am to 930am.
SGX - which is seeking public views on these amendments - has also asked for comments on whether direct business trades should be subject to price guidance, such as whether the transacted price should fall within a specific range of the security’s price on the previous or the current market day.
If there is a need for a price guidance, SGX is interested to know what it should be (e.g. within a certain percentage or a spread of the security’s price). Brokers said that SGX would query trades done at more than 10 per cent difference to the last transacted price.
The changes could deter retail investors from dealing in such block trades and limiting them to institutional plays, said brokers.
Married deals have been seen as one possible way to ramp up the stock volume and create a false scenario of active play, said one broker from Kim Eng Securities, adding that this could make captured stock movements more accurate.
‘Married deals could be seen as a form of market manipulation,’ said another broker from a local bank. ‘It gives an artificial impression of the counter,’ adding that the proposed changes could raise market transparency.
This could also be a way to raise efficiency by limiting the number of block trades that needs to be reported to the exchange, said the dealer from Kim Eng, though he said that he has not seen a surge in married deals recently.
SGX said that with the increased efficiency of trading on the exchange, the need for block trades is expected to be reduced.
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