Hard-hit Singapore Exchange to implement 'safeguards'
Singapore Exchange, south-east Asia's biggest, plans to add circuit-breakers by early next year after a plunge in shares of three commodity companies erased $US6.9 billion ($7.3 billion) in market value over three days.
Under the proposal, trading of a stock will be halted for five minutes if it moves 10 per cent in either direction, the exchange said. It had sought public feedback on the plan in June.
"We aim to introduce the dynamic circuit-breakers by early next year, subject to regulatory approvals," spokeswoman Joan Lew said.
The exchange imposed restrictions last week on the shares of Blumont Group, Asiasons Capital and LionGold after they plunged.
Trading caps to prevent wild swings in the stocks will give investors time to assess their holdings, according to trading network Liquidnet Holdings and the Securities Investors Association of Singapore, the largest investor lobbying group in Asia.
Circuit-breakers are "safeguards other markets have to allow time for investors to mull over the situation at hand to see if the information out there is sufficient to make an informed decision," SIAS president David Gerald said. "Investors will have an opportunity to quickly review their investment decision."
Regulators worldwide have evaluated safeguards since a May 2010 plunge briefly erased about $US862 billion from the value of US equities. They have stepped up oversight of capital markets overall following the global financial crisis in 2008.