Proposed changes to S'pore stock market Retail investors may need help to spot red flags, say observers

Call to strengthen investor education as regulators take more hands-off approach

- Chor Khieng Yuit

Investor education will have to be stepped up in tandem with changes proposed by the stock market regulator that include a stop to publicly querying firms on unusual trading activities, say observers.

This and other proposals were unveiled by the Singapore Exchange Regulation (SGX RegCo) on May 15 as part of a move away from the current prescriptive approach for listings on the mainboard, which is the platform for larger, more established companies.

RegCo plans to shift from publicly querying issuers to privately engaging with them when there is unusual trading activity; and to limit the validity period for trade-with-caution alerts to an initial period of two weeks.

It also intends to remove the watch list for loss-making companies. Companies will, however, still have to inform investors when they report losses for three consecutive years.

Public alerts on unusual trading activities serve as a signpost and draw retail investors' attention to certain stocks, said Mr Louis Koay, a senior financial services director at Phillip Securities.

Former financial journalist-turned-novelist Frederick Lim felt that while it is all right to remove the watch list, RegCo should continue to query companies publicly whenever there are unusual trading activities.

He said listed companies here are already quite slow to respond when they have to disclose negative news, answer SGX queries or call a trading halt.

He added that by the time they do so, the stock price would have run quite a bit in most instances.

Retail investors do not monitor the market so closely and are usually the last to react, Mr Lim said.

Mr Alvin Chow, assistant director of investment advisory at financial advisory firm iFast Global Markets, said the average retail investor may not be ready to navigate a stock market where there are potentially fewer red flags.