High speeds, high stakes

IN June, the Singapore Exchange (SGX) will enjoy a boost in liquidity as lowered fees and new discounts and rebates entice market makers and high-speed traders to set up shop here.

That's the plan, at least. But depending on who you ask, high-frequency traders are either harbingers of doom for capital markets or herald a new age of liquidity.

The truth, as is often the case, is a little more nuanced. High-frequency or algorithmic trading can be good or bad for the market, and the answer pivots on two points.

The first is whether SGX can properly police the new players it wants to attract. And second, will those players find it worthwhile to continue providing liquidity in this market?

SGX this month revealed that it hoped to sign on eight to 10 market makers and 15 to 20 liquidity providers as the exchange prepares to roll out a number of changes to its securities trading fees regime. Among those changes will be lower clearing fees and discounts or rebates for market makers, who have to provide bid-ask quotes, and liquidity providers, who have to trade a minimum value in specif…