MARKETS & INVESTING | Staff Reporter, Singapore

SGX cuts trading costs

Singapore Exchange has reduced the minimum bid size for securities and expects to see a tightening of bid-ask spreads by as much as 80%.

Starting 4 July 2011, according to an OCBC report, shares priced below S$0.20 will trade at 0.1ct steps instead of 0.5ct, while those trading within the $1-$1.99 range will trade at 0.5ct steps instead of 1ct. The minimum bid for stocks above $10 will be halved to 1ct from 2cts.

To cater to the narrowing of the bid sizes, SGX will widen the Forced Order Range for all securities to +/- 20 bids from +/- 10 bids across all price ranges. Forced Order Range is a pre-execution mechanism which helps investors to avoid error trades when entering prices of orders. Any orders outside the Forced Order Range must be confirmed by the use of the Forced Key function before those orders can be submitted.

The revised Minimum Bid Size and wider Forced Order Range will apply to all securities traded on SGX except exchange traded funds, loan stocks and bonds.

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