SGX should explain timeline rationale better

The Singapore Exchange has explained that the three-year timeline for companies to comply with the 20-cent minimum trading price (MTP) will bring evident benefits in the longer term (“Benefits of SGX rule to be evident only in longer term”; Nov 20).

After having their shareholdings decimated by share consolidation for the exercise, the investing public would surely like to know the basis of this statement, besides the vague reason that “achieving price equilibrium will take time”.

How would the SGX ensure that the value of general investors’ hard-earned monies that are lost through its execution of this corporate exercise in this manner will return after three years? In fact, the current consolidations are only the start of a nightmare for retail investors. When the three years are up, instead of reaping benefits, many investors stand to suffer further losses.

Affected companies entering Catalist three years later will have to make enormous sponsorship payments, which may sometimes exceed S$200,000 yearly. Most ailing companies will be delisted for being unable to pay; their investors then face the prospect of losing everything.

The SGX claimed it had briefings and engagements with affected companies and market participants. This stops short of mentioning, however, that most of those companies have disapproved of the implementation of the minimum trading price.