SGX's minimum trading price: painful but necessary

EVEN though it has been more than a year since the Singapore Exchange (SGX) proposed the introduction of a minimum trading price (MTP) of S$0.20 for stocks to remain listed on the mainboard, and even after dozens of companies have already embarked on share consolidations so as to satisfy the MTP which kicks in next March, there is still opposition (see, for example, "Minimum trading price seen working against share issuers, investors", BT May 6).

For one, critics question SGX's assertion that higher-priced counters are less susceptible to manipulation and ask whether affected stocks would enjoy more liquidity after consolidation than before.

Others cite real-life cases of companies which have over the past year undertaken some form of consolidation or the other but whose share prices have then weakened to below their consolidated prices.