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SGX extends compliance deadline for minimum trading price requirement

Companies have until Sep 1, 2016 to take action to comply with the requirement, the same deadline applied to companies which consolidate their shares before Mar 1, 2016. SGX also announced that it is revising the calculation methodology for MTP.

SINGAPORE: Amid the market volatility, the Singapore Exchange (SGX) has announced that it is giving companies whose shares have been hit in January more time to comply with the minimum trading price (MTP) requirement. 

In a news release issued on Tuesday (Feb 2), SGX said the deadline for these companies to comply with the MTP requirement introduced in March last year is now Sep 1, 2016, the same one applied to companies which consolidate their shares before Mar 1, 2016. 

The exchange said that companies which have experienced a dip in their shares' volume weighted average price (VWAP) below 20 cents due in January will get the extension. The extension will give these companies - which number about 20 as of end-January 2016 - "time to evaluate their options and take action to comply with the MTP requirement", it added.  

The bourse operator also announced it is revising the calculation methodology used to determine whether a company share price meets the MTP requirement, following market feedback. The revision will put it in line with the methodology of international data companies, it added. 

Now, the VWAP of shares following a share consolidation will now be computed based on historical prices adjusted for the consolidation ratio. Previously, the VWAP was computed based on the total value of securities traded for the 6 months under review divided by the total volume traded for the 6 months, said SGX.

As of end-January 2016, 86 of the 181 companies likely to be affected by MTP "have either acted, or announced plans, to comply", said the exchange. Out of the 86, 74 have decided on a share consolidation of which 57 have completed the corporate action.

"The VWAP of the shares of companies will now reflect fully the impact of a completed share consolidation. This will reduce the risk of companies having to consolidate shares at extremely high ratios," said SGX's Head of Listing Compliance June Sim.