SGX to tell more for 'Trade with caution' notices

INVESTORS may no longer have to guess why the Singapore Exchange (SGX) would slap a "Trade with caution" (TWC) warning on a certain stock.

SGX on Wednesday said it will no longer issue TWC announcements automatically, and when it does so it will include, when necessary, information that the market regulator has gathered in its review of a particular case.

"SGX's public query to a company on unusual share trading already serves as a red flag to investors," SGX chief regulatory officer Tan Boon Gin said in a statement. "To make clearer our concerns about certain unusual activities, we will issue, when necessary, the TWC announcements as a second-level heightened alert. We will include, where warranted, information gathered from our review of trading activities."

Under the current arrangement, SGX will issue trading queries to companies whose shares are seeing unusual trading activity that cannot be explained by any publicly known factor. If a company replies to say that it is not aware of any reasons for the trading activity, the TWCs will be automatically generating, urging investors to "exercise caution when dealing in the securities" of the company.

But SGX said it had received feedback about the high volume of TWC announcements and the lack of new information contained within them. In the year ended June 2015, SGX said it issued 47 TWC announcements following 85 public queries.