- POSTED: 10 Oct 2013 01:12
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The Securities Investors Association of Singapore (SIAS) has called on the SGX to introduce cooling-off period to guard against stock price volatility.
SINGAPORE: Two out of the three stocks that are under SGX's trading curbs -- Blumont Group and Asiasons Capital staged a rebound Wednesday on heavy trading volumes while LionGold closed the day flat.
Asiasons closed at 16 cents on Wednesday, up 38 per cent from Tuesday's closing price, while Blumont finished at 19 cents, up 46 per cent. But LionGold ended at 18.9 cents, down just by 0.1 cent.
While these stocks may have ended their losing streak for the first time since trading curbs were imposed on them, analysts have mixed views on to what extent the SGX should intervene to safeguard investors' interests.
The Securities Investors Association of Singapore (SIAS) has called on the SGX to introduce circuit breakers immediately.
The exchange had planned to introduce the mechanism by the end of this year, subject to regulatory approval and industry readiness.
The proposed mechanism will kick-in once security prices move by more than 10 per cent in five minutes. During a five-minute cooling-off period, trading can continue at or within the 10 per cent price band.
SIAS also proposed a longer cooling-off period for investors to evaluate the situation.
David Gerald, president and CEO of SIAS, said: "We want to see it as quickly as possible... Personally, I think five minutes (cooling-off period) is too short.
"Retail takes time to digest; they take time to receive the information. So perhaps, it should be longer, but it's one of the safeguards that we've been looking forward to."
Meanwhile, some industry players say there is confusion in the market over the interpretation of the exchange's short-selling rule for the "designated securities".
Some investors who bought shares of these three firms in cash did not realise that the stocks would only be credited to them four days later.
President of the Society of Remisiers Singapore, Jimmy Ho, said: "If someone comes in to buy, and then the stock goes up, he's not able to sell.
"He has to wait for three days for the stock to come down and make a loss when he sells. It simply defeats the purpose of trading in shares."
Yet, some analysts say the SGX has done enough.
Kelly Teoh, market strategist at IG Markets, said: "Their role is to make sure investors are protected from any type of volatility in the stock price. The question market participants might want to see is perhaps what is the stance they want to take in the future."
Phillip Securities managing director Loh Hoon Sun said: "In general, penny stocks are (a) higher risk for people to invest in, so investors need to take this into consideration."
In response to queries, the Monetary Authority of Singapore (MAS) said the SGX is the frontline regulator and looks into unusual trading activities.
Any possible breaches of the law will be referred to MAS and the relevant authorities.
MAS added that it does not comment on specific cases.