SGX RegCo eyes scrapping minimum trading price rule

It will stop adding companies to the MTP watch-list for the meantime.

The Singapore Exchange Regulation (SGX RegCo) has opened for public consultation its proposal to remove the Minimum Trading Price (MTP) rule, according to a news release.

The public consultation is open until 27 December. In the meantime, no companies will be added to the MTP watch-list until and unless the MTP framework is retained in its current form. Still, companies currently on the watch-list can still exit based on the existing criteria.

In addition, SGX RegCo plans to improve the financial watch-list that serves to alert investors to financially weak companies, mainly to prevent companies from circumventing the requirements to exit the watch-list.

“SGX RegCo will take into consideration whether profits the issuer recorded were due to non-recurrent income or items generated by activities outside of the ordinary course of business, and whether its auditor has issued an adverse or disclaimed audit opinion, or a material uncertainty relating to going concern on the company’s accounts,” it said.

The framework was proposed in 2014 for companies whose share prices were below 20 cents. In 2016, the MTP requirement was refined so that a company only enters the watch-list if its share price is below 20 cents and its market cap is below $40m. Companies in the watch-list have 3 years to improve their performance so they will not be delisted.