2 Key (SGX) Singapore Exchange Listed ETFs Changes Investors Should Know

Good news for Do it Yourself (DIY) investors who invest in Exchange Traded Funds (ETFs) on the Singapore Exchange (SGX).

Singapore Exchange Limited (SGX: S68) will be implementing two important changes to the Singapore ETF market, which has grown considerably in recent times as:

2021 was a watershed year for SGX-listed ETFs. The combined assets under managment (AUM( surged more than 40% as of 30 November 2021, with the offering expanding 17% from 30 ETFs to 35 ETFs.

The changes that take effect today (17 January 2022) will make investing in SGX-listed ETFs more accessible and cost-effective.

Here’s what investors need to know!

TL;DR: SGX Listed ETF Changes That Will Make Investing in SGX ETFs More Accessible and Cost-Effective

Change #1: Minimum Board Lot Size of All SGX-Listed ETFs Will be Reduced to 1 Unit

Before today, investing in SGX-listed ETFs could be prohibitive due to the minimum lot size requirement ranging anywhere from 5 units to 100 units.

But from, today (17 January 2022), the minimum board lot size for ALL SGX-listed ETFs will be lowered to 1 unit.

This will make investing in SGX-listed ETFs more accessible for investors and grant them more leeway for investment portfolio management.

Here’s an illustration of how this works.

As of 17 January 2021, 2.22pm, the Lion-Phillip S-REIT ETF (SGX: CLR) is trading at S$1.04 per unit.

To invest in this Singapore Real Estate Investment Trust (REIT), you would have to buy at least 100 units which will cost you S$104 (I’m not including brokerage fees and etc. for the sake of simplicity here).

But as of today, the minimum trade size for Lion-Phillip S-REIT ETF will be traded in multiples of $1.04 based on the NEW board lot size of 1 unit.

This reduces the minimum trade size per board lot by as much as 99%.

Let’s say you wanted to invest $500 in this ETF.

Today, you can buy 480 units of this ETF with a total value of S$499.20 and have S$0.80 leftover.

Whereas before today, you could only buy 400 units of this ETF with a total value of S$416 due to the minimum lot size of 100 units. This would mean you would have $84 leftover.

To further illustrate this, here are the top ten traded SGX ETFs in the first 11 months of 2021.

SGX Singapore Top 10 Traded ETFs in 2021 (For First 11 Months of 2021)

Source: SGX, Refinitiv, Bloomberg (Data as of 30 November 2021)
*Based on last traded price on 3 December 2021

Change #2: Widening of Forced Order Range For SGX Listed ETFs

The next noteworthy enhancement revolves around widening the forced order range for SGX-Listed ETFs.

This will allow investors and day traders of SGX-listed ETFs to execute limit buy and sell orders with wider price flexibility.

Before today, limit buy and sell orders had a forced order range of +/- 30 ticks above or below the last reference price.

According to POEMS, a forced order is a pre-execution mechanism such that an order outside the forced order range from the Last Done Price must be confirmed or “forced” through. This mechanism is arranged between the brokerage and investor.

Let’s use the SPDR STI ETF (SGX: ES3) priced at S$3 as an example.

Before today, the forced order range for this STI ETF was about +/- 1.0% from its last reference price.

But from today (17 January 2022) onwards, the forced order range for all SGX-listed ETFs will be widened to +/- 10% from its last reference price.

With this enhancement, investors can place limit orders within +/- 10% of the last reference price without triggering the forced order key.

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any investment product.