Minimum Trading Price yet another blow to the retail investor

MANY retail investors hold shares that are worth less than 20 cents on the stock exchange of Singapore, and are waking up to the harsh reality that they will be running up massive losses when this exchange-cum-regulator orders the counters to be consolidated under its Minimum Trading Price (MTP) policy in order to get them to be priced above 20 cents.

Under MTP, counters under the price of 20 cents will be required to consolidate their shares to get to the 20-cent minimum. After consolidation, the investor will be left with a reduced number of shares in the company.

For example, if an investor buys 10,000 shares at five cents a share in the counter and the company does a share consolidation of 5:1 to achieve the minimum trading price of 20 cents, this investor will be left with only 2,000 shares.