Singapore Exchange (SGX) is revising the fee structure for its securities market to make trading more cost-efficient and to facilitate market making and improve liquidity.
The revisions to clearing and depository fees will be rolled out from 2 May 2014.
The change will encourage on-exchange trading, thereby enhancing liquidity, transparency and price discovery on the market.
The clearing fee will be reduced by one-fifth from 0.04 per cent to 0.0325 per cent of contract value. The cap of USD600 on this fee for contracts of USD1.5m or more will be removed.
Transfers and onward settlement fees, which are mainly levied on brokers and depository agents, will be revised to encourage on-exchange trades, thereby increasing transparency and liquidity, and consequently improving price discovery in the market. Transfers and onward settlements pursuant to on-exchange trades will be charged a fee of USD30 and transfers and settlements pursuant to off-exchange trades will be charged a fee of 0.015 per cent of the value of the transaction, subject to a minimum of USD75.
SGX will also introduce incentive schemes to facilitate the participation of market makers and liquidity providers. To qualify for incentives, these participants will provide competitive two-way quotes, thereby making the process of orders being executed smoother and adding liquidity for the benefit of all investors.
“Our new pricing structure and incentive programme for market makers and liquidity providers are part of a package of initiatives to create a stronger securities market in Singapore. Investors coming to SGX will benefit from lower costs and in the longer run, better liquidity and market depth, all of which will make for a better investing experience in terms of cost and execution,” says Magnus Bocker, CEO of SGX.
Implementation of the fee revision is subject to industry readiness as technology changes in support of the rollout will be required. The implementation is also expected to be broadly revenue neutral to SGX.