The regulator's plan to introduce a collateral requirement on securities trading was widely criticized by industry players, who said it would affect market liquidity.
The Monetary Authority of Singapore (MAS) is said to be reconsidering its plan to put in place by 2020 a requirement for retail investors to place a 5-percent collateral on their open positions.
«We are now conducting an assessment to take stock of the combined market impact of these initiatives, before considering the implementation of other measures, such as collateral requirements for securities trading,» Lee Boon Ngiap, MAS assistant managing director (Capital Markets), was quoted by «The Business Times» (behind paywall) as saying.
Responsible Training
The requirement, which would prevent uncollateralized contra trading, is meant to ensure responsible trading among retail investors and enhance credit risk management for securities intermediaries. The measure was raised in a MAS-Singapore Exchange (SGX) consultation paper but was criticized by industry players who said it would kill interest in equity trading among retail investors and market liquidity. Another measure is reducing the trade settlement period to two days from three, which was implemented in December 2018.
Ngiap also highlighted the various initiatives the regulator and SGX have taken to improve securities market trading practices and prevent market abuse, while brokers cited by the newspaper said that contra trading volumes have fallen along with market volume.
