SGX Seeking to Reduce Trading Lot Size

Investor Monkey - News

Investor Monkey - SGX LogoThe Singapore Exchange (SGX) is seeking the public views and regulatory approval on reducing the standard board trading lot size from the current 1,000 units to 100 units and eventually to 1 unit, citing that the move will beneift the public as individuals as they will no longer be restricted to investing in lower-priced shares. Many of the index component stocks and blue chips are trading at higher-price, with the component stocks trading at an average of S$8.94 per unit. With the trading lot size at 1,000 units, the investor will have to fock out S$8,940 per lot of component stock they purchase, less any transaction fees.

SGX aims to introduce the proposed standard board lot size of 100 units by the first quarter of next year, applying only to ordinary shares, real estate investment trusts, business trusts, company warrants, structured warrants, extended settlement contracts and shares on GlobalQuote.

With the lowering of the lot size, it allows small investors to have the ability to add the high-value shares into their portfolio, something which is not possible for now. Though it seems a very good initiative for these small investors, it may not be healthy for young investors with not much spare cash, who wishes to make quick money by buying shares to trade since it is becoming more affordable to buy shares with smaller units per lot.