The Singapore Exchange (SGX) will mandate all Mainboard IPO companies to allocate to retail investors, at least 5 per cent, or S$50 million, whichever is lower, of their offer size.
The introduction of the minimum IPO allocation is aimed at facilitating greater retail participation in Singapore’s equities market. The new rules on the minimum allocation are effective 2 May 2017.
Speaking on the matter, Chew Sutat, Executive Vice President and Head of Equities and Fixed Income, SGX, said, Retail investors are important participants in the Singapore markets and giving them access to at least 5 percent of each Mainboard IPO will encourage more to consider equity investing. If market conditions permit, we encourage companies to make available more shares than the floor to retail investors.
We recognise that market forces are dynamic and will continue to monitor the public subscription trends of IPOs to ensure that the minimum allocation amounts are appropriate for the Singapore market,” Chew added.
SGX received formal feedback from 20 respondents via the public consultation which ended in March 2016. Informal engagements with stakeholders were also held to gather feedback.
Separately, the SGX is also consulting the public on other proposed adjustments. Firstly, the bourse plans to increase the minimum bid size for stocks and relevant securities trading in the $1.00 to $1.99 range from the current $0.005 to $0.01. Secondly, there is a plan to widen the forced order range for stocks and relevant securities from the current +/- 20 bids to +/- 30 bids.
Lastly, the bourse is re-timing the one-hour mid-day break from 12.00pm to 1.00pm from the previous 12.30pm to 2.00pm before continuous all-day trading was implemented in August 2011.The consultation will open till March 29.
Ensuring a minimum allocation to retail investors for every Mainboard IPO is a step in the right direction. This initiative provides individuals especially new-comers with more choice when considering ways to diversify their savings,” said David Gerald, CEO and President of the Securities Investors Association (Singapore).
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