SGX relaxes listing requirements for structured warrants

A year after Hong Kong resurrected its warrants market by relaxing listing requirements, the Singapore Exchange (SGX) has eased its own listing rules for covered warrants in a bid to boost the local market.

Under the new rules, which become effective this month, the contentious requirement for warrants issuers to place 75% of the issue with a minimum of 100 investors has been scrapped. The minimum size of the issue has also been reduced to S$2 million ($1.15 million) from S$5 million. Mirroring Hong Kong's regulatory change, issuers are required to appoint a designated market maker - either the warrants issuer or an SGX securities trading (SGX-ST) member - to provide competitive bid-ask quotes for the issued warrants. Issuers that do not want to make a market for their warrants, however, may continue to list their warrants based on the former minimum placement spread and issue size requirements.

"The alternative set of rules will allow a wider range of structured warrants to be offered in the market," said Gan Seow Ann, head of securities trading at SGX. "The introduction of market making in the warrants market will enhance liquidity and provide greater price transparency."

In November 2001, Hong Kong amended its own warrants regulations with the removal of requirements that placed 85% of an issue with a minimum of 100 different investors, while the minimum issue size was dropped from HK$50 million ($6.4 million) to HK$10 million.