MTP initiative hurts retail investors: SRS

THE Society of Remisiers (SRS) believes the Singapore Exchange's (SGX) introduction of the S$0.20 minimum trading price (MTP) initiative for its Mainboard counters is well-intentioned. But SRS is of the view that this MTP exercise could have been better implemented, without unduly affecting the interests of our retail investors.

As at July 1, 2014, there were 1.6 million CDP (Central Depository) accounts, and for the 12 months ended August 2015, there was a sharp increase of 74,000 new accounts. Proportionally, the total number of retail clients accounts for more than 80 per cent of the total. While one-third of Mainboard counters fall under MTP, SRS estimates at least 200,000 retail investors are affected by it. As the market for mid and small- cap stocks has considerably weakened over the past quarter, more Mainboard companies are now subject to this MTP initiative.

Should we assess the negative impact of the MTP implementation from the perspective of market capitalisation alone, where the total value of penny stocks belonging to mostly retail clients is but a fraction of the total, or by the number of retail clients (man-in-the-street) affected?