A new rule to impose a minimum share price on mainboard-listed companies is aimed at addressing the risks associated with penny stocks, said Singapore Exchange (SGX) chief executive Magnus Bocker yesterday.
He told shareholders at its annual general meeting that few penny stocks get research coverage, which makes it hard for retail investors to get a clear idea of their worth.
"We also know that most institutional investors who provide a lot of liquidity for us generally don't invest in low-priced stocks because of the risk associated with them," he added.
"As such, having a minimum trading price will benefit all of us as investors in this market and improve the overall quality of our market."
The SGX plans to introduce minimum trading price rules by next March.
After a one-year transition, mainboard firms will be put on a watch list if the six- month volume-weighted average price of their shares is still below 20 cents as of March 2016.
They will then have up to three years to comply with the requirement or face delisting.
Mr Bocker also told the meeting that there are signs that retail interest is growing.
He cited a 22 per cent jump in the number of accounts at the Central Depository to 1.6 million, but he noted that only about 8 per cent of people here actively invest in stocks, which is "about half the rate in Australia and a third the rate in Hong Kong".
He also said the Singapore and Taiwan exchanges may have the link between the two bourses "up and running" by the end of next year.
Earlier this month, SGX inked an agreement with the Taiwan Stock Exchange to work towards linking the two bourses.
The aim is to offer members of each exchange an efficient, cost-effective and direct way to buy and sell stocks listed on the other exchange.
This article was first published on Sep 26, 2014.
Get a copy of The Straits Times or go to straitstimes.com for more stories.