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The unhurried lunch returns for brokers

Traders greet mid-day break with mixed feelings; some see it as strategic move, others are more blase

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Lunch time crowd at Raffles Place. In addition to bringing back the lunch interval, the Singapore Exchange also tweaked the tick size for stocks in the S$1.00 to S$1.99 range and widened the forced order range from 20 bids in either direction to 30 bids.

Singapore

STOCK traders here finally got back their proper lunch break after years of scarfing down their meals while scrambling for their phones when clients called.

While some heaved a collective sigh of relief, others were unmoved by the noon-to-1 pm pause, which was reinstated six years after the mid-day break was ditched by the Singapore Exchange (SGX).

The bourse operator had in 2011 dropped the lunch interval - which at the time lasted from 12.30pm to 2pm - leaving some retail brokers unhappy about the loss of opportunities to wine and dine clients or to conduct research.

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Jimmy Ho, president of the Society of Remisiers (Singapore), welcomed the reintroduction of the break, saying he no longer has to deal with clients' calls during the interval now that the market is closed for lunch.

He also believed that "it's strategic to have our lunch break at the same time with the market in Hong Kong" as the Singapore scene tracks the Hang Seng quite closely.

SGX's move in 2011 to dispense with the mid-day break came on the back of pressure for Asian exchanges to compete for volume through longer trading hours. At the time, the Tokyo Stock Exchange, known for its short trading day, cut its lunch break by 30 minutes to an hour. In 2011 and 2012, Hong Kong's stock exchange extended trading hours in two phases to match those in mainland China.

Mr Ho said that taking away the lunch break did not boost investors' appetite, which had been battered by various downcycles. "There's no direct correlation between lunch break and trading volume... it does not mean the longer the hours the larger the volume," he noted, adding that whatever the case, transactions can be executed either way.

Others like CIMB remisier Ernest Lim said the move gives them time to build rapport with clients and gain a broader understanding of markets and specific companies.

"Contrary to most people's belief, most accredited and private banking clients still rely on brokers to execute trades. Even for those who trade online, they may need certain company specific information and may rely on their brokers to search before they put in their trades," Mr Lim said.

The break was also scrapped partly to address gap risk - the danger that traders may be unable to react to major movements in other markets during the break; but remisiers say they can plan around this.

In response to queries, SGX said based on 2016 data, Singapore trading volumes during the lunch hour of 12-1pm have typically been the lowest.

Securities Investors' Association of Singapore chief David Gerald noted that retail investors have no objections so far to the resumption of lunch hour simply because there are more avenues out there now for them to trade, including putting orders online or even FaceTime their remisiers.

Meal time is not the only tweak in the latest trading changes by SGX. The tick size for stocks in the S$1.00 to S$1.99 range, for instance has been expanded from 0.5 cent to one cent. This means stocks can move up or down by a wider percentage.

The forced order range is also widened from 20 bids in either direction to 30 bids, meaning remisiers can now enter a wider range of trade prices for clients without incurring a small cost should the price go beyond the range and the trade is "forced".

Said the bourse operator: "Sustainable growth in trading volumes requires active participation by all segments of the ecosystem, including equity analysts, brokers, fund managers as well as institutional and retail investors.

"The midday break, increased minimum bid size and wider forced order range are adjustments to the equities market structure, aimed at encouraging a vibrant securities market ecosystem while striking an appropriate balance between the diverse objectives and needs of different market participants. Market participants will need time to adjust to these changes. We will monitor the impact closely and continue our engagement with stakeholders."

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