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Higher clearing fees = lower liquidity?

IN April, the Singapore Exchange (SGX) revised its fees and lowered the clearing fee from 0.04 per cent to 0.0325 per cent of the contract value. Sounds good in theory because it should lead to lower transaction costs for investors; however, it also removed the $600 cap.

What this means is that for large trades, the clearing fee rises - eg for $5m, the fee is now $1625 - almost triple the original $600. Proprietary traders say this is a huge disincentive to them to trade, resulting in lower volatility and liquidity. I've asked SGX for comments and am awaiting their reply.