Meanwhile, SGX is studying measures to reduce systemic risks in the stockbroking industry that might result from the expected increase in competition and fall in brokerage rates. Market practitioners are being consulted on the feasibility of measures such as requiring investors to place security deposits before they begin trading. The Exchange expects to announce the outcome of this study by July 2000.
The full liberalisation of brokerage rates was originally scheduled to take effect on 1 January 2001, with the possibility of an earlier date for on-line trades.
SGX has decided to bring forward this liberalisation in the interest of market development. In anticipation of the heightened competition, members have already been reviewing their business strategies and operations.
Besides introducing online trading systems, many of them have devised incentive and reward schemes that have the effect of reducing the customers' net cost of trading.
Thomas Kloet, CEO of SGX, said: "The market environment is such that members are under increasing pressure to sharpen their competitive edge by becoming more efficient, cost-effective and innovative. By bringing forward the liberalisation of brokerages, we will help to attract greater international interest to the Singapore market, and quicken the pace of developing its sophistication and vibrancy."
