STI constituents, potential members face tighter liquidity rules

It will be implemented in September.

Stocks which are part of the Straits Times Index (STI) will face tighter liquidity rules starting September.

Under the new rules, STI components will be required to have a higher percentage of their issued shares traded in a given period.

An existing STI constituent currently needs to trade at least 0.04% of its shares in issue in 8 of the 12 months. The new rules hiked this requirement to at least 0.08% of its shares in issue.

Potential STI members will also need to turnover at least 0.10% of their shares in issue based on their median daily trade per month in 10 of the 12 months prior to the March or September review. This requirement is up from just 0.05% currently.

The tighter liquidity requirement will not be applied to the other indices in the FTSE ST Index Series.The new STI liquidity rule and FTSE ST Index Series segmental change will be implemented following the September review, and the new component stocks will be applied after the close of markets on the 3rd Friday in September (18 September 2015).

The new rules were announced by index partners Singapore Press Holdings (SPH), Singapore Exchange (SGX) and FTSE Russell.