SGX Trading Costs Decline in 12 months to June

Trading costs of Singapore shares went down substantially for large, mid and small-cap stocks in the last 12 months to June, the Singapore Exchange (SGX) announced Tuesday.

The local bourse operator said the lower trading costs across the board, along with higher average daily number of trades and quotes for the overall market, was likely a result of market initiatives implemented over the past year.

“The decline in trading costs is a likely result of market liquidity enhancing initiatives such as the changes to minimum bid sizes in July 2011. In June 2012, there was a further sharp decline in price impact cost across all size categories, despite lower volumes,” SGX said in a statement.

Meanwhile, there was a general decline in traded value throughout the year but trading volume increased significantly in the first four months of 2012, indicating a focus on penny stock trading during this time.

Daily traded value halved in the last two quarters of 2011 from over S$1.9 billion in August 2011 to S$0.8 billion in December 2011. The market saw an improvement in traded value during the first quarter of 2012, but declined again during the second quarter.

“Trading activity slowed for large-cap and mid-cap stocks in the second quarter of 2012 amid renewed fears of the eurozone sovereign debt crisis and an easing of China’s expansion,” SGX noted.

Volumes for small-cap stocks, however, remained at levels significantly higher than the July to December 2011 period.

Significant changes in trading activity took place in the months following July and August 2011, when minimum tick sizes were reduced for securities and SGX’s Reach trading engine was implemented respectively.

Average daily total trades in the August 2011 to June 2012 period were generally sustained at levels twice the average number of trades transacted in the first-half of 2011. Furthermore, there was a permanent reduction of approximately S$20,000 in average trade size during this period.