Is there a case to bring back midday break?

THERE is a fair amount of speculation in the market that the Singapore Exchange (SGX) is soon to consult the interested public on whether to (i) re-introduce a midday break in trading and (ii) widen spreads on the assumption that if traders think they can make more money, liquidity should improve.

Before going on to discuss what might be put up for public debate and why, it's worth noting that proposal (i) above would reduce trading hours when the original rationale of moving to continuous all-day trading (CAT) in 2011 was to allow investors more hours to react to movements in overseas markets like Japan, Hong Kong and, to some extent, Australia, and proposal (ii) doesn't guarantee increased liquidity - in fact, it makes for a more inefficient, costlier market.

So one has to ask: Why is there speculation - fairly robust, we might add - that SGX is considering introducing these seemingly retrograde moves?