SGX RegCo launches consultation for proposed safeguards to securities market

Proposed enhancement include price collars and an extension of the auction routine.

The Singapore Exchange Regulation (SGX RegCo) has launched a public consultation on proposed enhancements to the auction mechanism in the securities market.

SGX RegCo said that these changes will prevent extreme price dislocations whilst enabling price discovery, which will then bolster investor confidence in, and strengthen the robustness of, auction routines.

Three possible enhancements are being considered: the implementation of price collars, which will reportedly act as hard price limits on the matched auction price; the extension of the auction routine, where instead of hard price limits more time will be given to market participants to manage their orders should the indicative opening price move beyond a certain threshold; and the adoption of a hybrid model with both a time extension and hard price limits, intended to promote market-led price discovery in an orderly manner during the opening and midday auctions, while ensuring greater price stability and a fixed end time in the closing auction.

The proposed enhancements will add to the securities market’s other safeguards that include the exchange’s ”force key” function and the dynamic circuit-breakers..

The SGX has unveiled the details of the proposals at its consultation page, which is open for feedback until August 15