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Position in Universe 273rd / 6102

UPDATE 1-SGX seeks price limits on stock auctions after $41 bln flash crash

Mon 15th July, 2019 11:40am
(Adds more comments from SGX)
    SINGAPORE, July 15 (Reuters) - Singapore Exchange's
 SGXL.SI  regulatory unit is proposing imposing price limits for
daily stock auctions to prevent incidents such as the $41
billion flash crash in January that briefly roiled shares in
conglomerate Jardine Matheson  JARD.SI .
     The proposed rules are the most significant for the
securities market since the bourse introduced circuit breakers
for the trading session five years ago, officials from SGX
Regulation (SGX RegCo) told a news conference on Monday.
    Currently, the bourse has no circuit breaks in auctions,
during which brokers place buy and sell orders. SGX RegCo is
seeking a 30 percent price cap for the opening auction and a 10
percent price cap for the midday and closing auctions.
    "It's a trade-off between effectiveness and price discovery
essentially and we are always trying to balance between these
two principles," said Tan Boon Gin, chief executive of SGX
    Shares in Jardine Matheson, among the most valued
Singapore-listed stocks, crashed 83 percent minutes after
trading began on Jan. 24, wiping nearly $41 billion off its
market value, before rebounding.
    Some brokers involved in the transaction had requested SGX
to amend or cancel these trades but SGX had said trading was
orderly and it found no basis to cancel the transactions after a
    "The circuit breakers are not available for auctions, so
whatever we are proposing today is for auctions. Whatever
happened in Jardine Matheson took place during the opening
auction," Tan said.
    SGX RegCo officials said some price caps are already used by
exchanges in Asia and the United States in daily auctions.
    SGX RegCo is seeking an extension of the auction process and
also considering a hybrid model, where time extensions will
apply for the opening and mid-day auctions while a price cap
will be applied on the closing auction.
    Public consultation for the proposals ends on Aug.15 and
they could come into effect next year, officials said.

 (Reporting by Anshuman Daga; Editing by Jacqueline Wong & Shri
 ((; +65 64035676; Reuters Messaging:
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