Saturday, October 12, 2013

Singapore Exchange to adopt circuit breakers by early 2014

Written by Bloomberg  
Friday, 11 October 2013 19:09
Singapore Exchange, Southeast Asia’s biggest bourse, plans to add circuit breakers by early next year after a plunge in shares of three commodity companies erased $6.9 billion ($8.6 billion) in market value over three days.

Under the proposal, trading of a stock will be halted for 5 minutes if it moves 10% in either direction, the exchange said in an e-mailed response to queries. The bourse said it sought public feedback on the plan in June.

“We aim to introduce the dynamic circuit breakers by early next year subject to regulatory approvals,” Joan Lew, a spokeswoman for the exchange, said in the statement yesterday.


The bourse imposed restrictions this week on the shares of Blumont Group, Asiasons Capital and LionGold Corp. after they plunged. Trading caps to prevent wild swings in the stocks will give investors time to assess their holdings, according to trading-network Liquidnet Holdings Inc. and the Securities Investors Association of Singapore, the largest investor lobbying group in Asia.

Circuit breakers are “safeguards other markets have to allow time for investors to mull over the situation at hand to see if the information out there is sufficient to make an informed decision,” David Gerald, president of SIAS, said in an e-mailed reply to queries today. “Investors will have an opportunity to quickly review their investment decision.”

FLASH CRASH
Regulators worldwide have evaluated safeguards since the May 2010 plunge known as the flash crash briefly erased about $862 billion from the value of U.S. equities. Exchanges in that country have implemented a limit-up/limit-down initiative that prevents market makers from quoting shares at prices deemed too far above or below current levels.

The city’s plan for circuit breakers “should help minimize market manipulation,” said Kelly Teoh, a strategist at IG Asia Pte in Singapore. “The regulator can hold all directors responsible including non-executives or at least have the process in place to bring them in for questioning if the circuit breakers are breached more than once.”

The Singapore bourse said Oct. 6 that shares of the three companies have been declared designated securities, prohibiting investors from selling them unless they hold the same quantity of stock. Buyers must make cash payments for the transactions.

The bourse said in a separate e-mailed statement yesterday there were short sales on Blumont and Asiasons on Oct. 7, contrary to trading directions it gave after classifying them as designated securities.

EXCHANGE PROBE
“We will be investigating these cases and take the appropriate disciplinary actions as necessary,” Kelvin Koh, head of market surveillance at Singapore Exchange, said in the statement. “SGX will continue to monitor closely the market in the three designated securities. We will assess the trading conditions and lift the designation as soon as it is appropriate to do so.”

Regulators around the world have stepped up oversight of capital markets after the global financial crisis in 2008. The Monetary Authority of Singapore established a 13-member council in 2010 with the goal of boosting corporate governance standards and investor confidence.

Blumont, which invests in minerals and energy, slumped 94% over two trading days on Oct. 4 and Oct. 7. That shaved $4.9 billion off its market value, prompting the company to scrap a proposed $146 million acquisition of Australia’s Cokal Ltd. Scrutiny of the stock began after it surged more than 10-fold in the first nine months of the year.


BLUMONT INVESTOR
Alexander Molyneux, former chief executive officer of Southgobi Resources Ltd., agreed earlier this week to buy 135 million shares and assume the role of chairman at Blumont after the transaction is completed. The shares, which climbed 54% in the past two days, dropped 15% at the close of trading in Singapore today.

“I knew the company and its assets quite well, so I thought it was a buying opportunity,” Molyneux said in a Bloomberg Television interview in Hong Kong with John Dawson today. “With what we saw happened last week and on Monday this week to these stocks, it obviously would’ve been helpful to have circuit breakers.”

Asiasons, which last month bought a stake in U.S. oil and gas producer Black Elk Energy Offshore Operations LLC, tumbled 96% over the three trading days through Oct. 8, shaving $2.5 billion in market value. The stock sank 25% today.

RECORD PENALTY
LionGold, which yesterday cited its share volatility for terminating talks to buy South American gold explorer Minera IRL, plunged 87% over the three-day period, wiping out $1.2 billion in value. The stock fell 17% today.

The decision to introduce circuit breakers comes a month after Everbright Securities Co. announced a 523 million yuan ($105 million) loss after $3.8 billion in erroneous trading roiled China’s equity market and drew a record regulatory penalty that banned four executives from the market for life.

Trading in the National Stock Exchange of India’s Nifty index and some individual companies stopped for 15 minutes in Mumbai a year ago after the 50-stock gauge tumbled as much as 16%. A brokerage that mishandled trades for an institutional client was to blame, the exchange said then.

Markets including South Korea, India and Taiwan use circuit breakers, while countries including Japan have daily price limits depending on the stock’s value, according to CLSA.

“Circuit breakers are put in place to stop the market or a stock from making illogically high or low moves,” Larry Tabb, founder and chief executive officer of market research firm Tabb Group, said in an e-mail.“A pause gives traders the opportunity to regain their senses.”


Source/Extract/Excerpts/来源/转贴/摘录: http://www.theedgesingapore.com/
Publish date: 11/10/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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