Channel NewsAsia

Concerns raised over unusual share trading activity

Recent cases of unusual share trading activity have led to concerns over the possibility of insider trading in the markets.

SINGAPORE: Recent cases of unusual share trading activity have led to concerns over the possibility of insider trading in the markets.

Some market watchers told Channel NewsAsia that it might be the right time to relook at the current regime.

Earlier this month, a major change to how public buses will operate in the future was announced.

But even before the announcement, the share market was already abuzz with speculation.

SMRT shares surged over 40 per cent ahead of the announcement. Similarly, SBS Transit saw its stock jump over 20 per cent.

Share price increases ahead of an important announcement are not that uncommon.

Over the last month, there were at least four such high profile cases. One of them involved Olam, which saw its share price climb 35 per cent over the weeks leading up to a takeover offer by Temasek.

Similarly, Singapore Post's shares rose 19 per cent before it announced that Chinese Internet firm Alibaba would be taking a 10 per cent stake in the firm.

The unusual share trading activities have led to calls for tighter oversight.

Mak Yuen Teen, associate professor of accounting at NUS Business School, said: "There clearly are concerns that there could be insider trading, although I've to say that just because there is a price run-up before an announcement, sometimes it's because of informed trading, not necessarily insider trading."

Currently the Singapore Exchange (SGX) works with the Monetary Authority of Singapore, flagging unusual market movements.

And depending on the situation, a case could then involve the Commercial Affairs Department and the Attorney-General's Chambers (AGC).

The authorities do not comment on specific cases -- to avoid jeopardising investigations that could be underway.

But some market watchers say this should change, adding there's room for greater transparency.

Assoc Prof Mak said: "I would... like to see a regime where, maybe every year, SGX, for example, reports how many cases have been referred to the MAS.

And then MAS can disclose how many cases it has reported to the Commercial Affairs Department (CAD) for further action, he said.

"And CAD can say how many cases were referred to the AGC for possible criminal prosecution, for example," he added.

Jimmy Ho, president of The Society of Remisiers (Singapore), said: "Who are the buyers that should be investigated? First condition is -- they buy before the news.

"Second, the trades must be significant -- as the smaller trades might not impact the market, and the third thing is to apply the rule across the board."

However, retail investors lobby group SIAS says the right safeguards are already in place.

David Gerald, president and CEO of the Securities Investors Association Singapore (SIAS), said: "When the investment is interfered with unlawfully, there is SIAS to come to.

"There is the police to go to... The SGX surveillance team will (be the first to) get into action. So the measures currently in place are sufficient."

SIAS said SGX has a public query system to alert retail investors of unusual price movements.

That in itself may not guarantee that firms queried will provide a satisfactory explanation to the SGX.

Ultimately, retail investors will need to exercise their own judgement. 

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