Singapore brokerages restrict trading on GameStop, AMC and Koss
Singapore
SOME online brokers in Singapore have curbed trading for several US stocks that have become the epicentre of a battle between short sellers and an online army of retail investors. This has sparked an outcry from Singapore retail investors who were momentarily locked out of the market for these stocks.
Several brokers operating in Singapore, including IG Group, Phillip Securities, iFast Financial, Tiger Brokers, UOB Kay Hian and Interactive Brokers, restricted trading in shares for the video game retailer GameStop, cinema chain AMC and headphone maker Koss starting Thursday.
Checks by The Business Times (BT) showed that Phillip Securities had stocks including GME, AMC and Koss on its restricted trading list as of Jan 31, in order to "control credit exposure". Users will not be able to buy these counters through the Internet, but can call their trading representatives to place the order.
Similarly, these three stocks were excluded from UOB Kay Hian's list of tradable US counters since Thursday.
Online trading platform IG Group holdings said on Saturday it will restrict any new positions on GameStop and AMC due to "extreme volatility" in the market. An update on its website stated that the platform may increase margins, including up to a 100 per cent, at short notice.
"Due to extreme volatility, and to prioritise the service we give our existing clients, we are not allowing any new positions to be opened on the US stocks GameStop and AMC Entertainment," said London-based IG Group in a tweet.
Others such as Interactive Brokers, iFast, and Tiger Brokers halted buy trades for these counters on Thursday, but lifted them a day later.
Brokerages are implementing trading curbs after retail investors flocked en masse to some of the market's most heavily shorted names, leading to wild swings on orders inspired by reddit forum WallStreetBets and other online forums. Brokerages tend to limit trades on speculative stocks as part of their risk management process.
This decision from brokerages in Singapore mirrors restrictions from their US counterparts. It triggered a backlash, and users took to Reddit forum r/Singapore to express their outrage after they were unable to execute trades on these counters.
Tiger Brokers and iFast cited upstream restrictions from trading counterparties as the reason behind the halt.
Ian Leong, head of business development at Xiaomi-backed Tiger Brokers Singapore, noted that these restrictions usually happen when counters are volatile, and it is "common for counters to be placed under a restriction list to protect investors from volatile speculative stocks".
iFast, which operates trading platform FSMOne, told BT that the trading prohibition was imposed by counterparties it worked with for the US exchanges as part of their risk management process.
"As we operate on a prefunded model, which is seen by our US counterparties as a platform with lower risk, the trading prohibition was lifted within the same trading day," said an iFast spokesperson.
IG Group said in an update on its website that the increased volatility in certain stocks such as GameStop and AMC "increases the risk of sudden, large or rapid loss" as well as the "potential for gaps", where stocks fall dramatically when the market opens.
GameStop soared more than 400 per cent in the first three days last week, attracting interest from traders around the world. It tumbled 44 per cent on Thursday after brokerages began announcing restrictions, triggering a flood of angry responses from customers.
But amateur traders around the globe returned the following day using other online trading platforms. Users on r/Singapore noted that Saxo Markets and DBS Vickers still allow trading of these counters.
Shares of GameStop rose 67.9 per cent on Friday, recouping Thursday's losses. The video game retailer's shares are again up more than 1,700 per cent since the start of the year. Shares in cinema chain AMC snapped back 53.7 per cent on Friday, while Koss rose 52.5 per cent.
Platforms have urged their users to be cautious. Tiger Brokers' Mr Leong told BT: "We strongly recommend our users to adopt a prudent approach when it comes to investing. Investors should always look at diversifying their investment portfolio and taking a mid- to long-term view on their investment."
READ MORE: The revenge of retail investors
