There's been a lot written about the state of the local stock market in the past six months - SGX maintains that this is a quality market, the broking community and the investing public maintains that it is not. To be fair to SGX it is not all doom and gloom - there are pockets of quality which give rise to some reason to be optimistic. Furthermore, the remisier community has to accept that it is facing greater demands from an increasingly sophisticated retail public, a rising proportion of which appears to be trading through their private banks and other platforms. Also it would be absurd to blame only SGX for the moribund state of the market since there are many other players in the ecosystem which have to shoulder responsibility. It also makes no sense to direct all criticism at the exchange because a bad market affects SGX's bottom line as well, so it is in its best interests to try and cultivate a thriving market.
I've said this before - the exchange's staff are mainly earnest and hardworking people who are trying their best to do a decent job and turn things around. Yet very few people are prepared to recognise this. The criticism this week hurled at SGX over its software glitch has been positively vitriolic and the intensity of the anger manifested on chat forums suggests to me that emotions are very deep-rooted. As such, I think it's time the exchange actually ponder the reasons for why this is so - why is it that so many people, not just the broking community, are so eager to pounce on SGX's mistakes? Why the intense dislike?
Consider for example, SGX's plans for a minimum trading price (MTP) and smaller board lots. In my view these are good moves aimed at improving the market's microstructure- we can't have stocks trading at 0.1 cent, or blue chips that are beyond the means of small investors. Granted, the MTP is only a cosmetic move and doesn't change the company's fundamentals at all, but why not try it? After all, other markets like the US have MTPs so why not push the boundaries a little? Yet despite there being good arguments in favour of the move, the response from brokers and others in the business community has been mainly negative and critical. The same goes for collateralised trading - it is worth trying and should reduce the credit risk for remisiers, yet oddly enough, remisiers have been among the most vocal opponents.
It seems to me that SGX's relationship with its stakeholders - other than shareholders - has deteriorated to the point where it doesn't matter what it does, the reflex, knee-jerk reaction is to reject and criticise, even if the proposals are sound and might actually work. What is the source of this unpopularity and dislike? Is it rooted in a simple in-born rejection of authority that exists in all of us? Or is there something more?
Answers on a postcard please.