Don't merge MTP and loss-making watch-lists

Published Tue, Mar 1, 2016 · 09:50 PM
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IT could well end up being a case of subtraction by addition. We're referring here to a suggestion that the Singapore Exchange (SGX) should consider merging its soon-to-be-announced minimum trading price (MTP) watch-list of companies with its existing financial entry watch-list that was introduced some years ago for loss-making companies. Although adding the two into one has the appeal of streamlining information for investors and therefore has support from some quarters, on reflection, it could be difficult to implement and administer, and could well end up causing more confusion instead of less.

Before discussing why, it's worth recalling a few salient points about the two initiatives which, although they share the common goals of raising quality and enhancing shareholder wealth, approach the problem from different angles and may not necessarily require the same corporate actions or regulatory treatment.

MTP's rationale is to force mainboard companies whose shares have languished below a certain threshold - S$0.20 in the case here - to proactively managing their affairs and to get their share prices moving upwards via suitable corporate actions.

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