2 key SGX-listed listed ETF changes investors should know

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

Singapore Exchange Limited 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 per cent as of Nov 30, 2021, with the offering expanding 17 per cent from 30 ETFs to 35 ETFs.

The changes that take effect today (Jan 17, 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 one unit

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

But from, today (Jan 17, 2022), the minimum board lot size for ALL SGX-listed ETFs will be lowered to one 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 Jan 17, 2021, 2.22pm, the Lion-Phillip S-REIT ETF is trading at $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 $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 one unit.

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

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 $499.20 and have $0.80 leftover.

Whereas before today, you could only buy 400 units of this ETF with a total value of $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)

Top 10 Traded ETFs in 2021 YTD Stock Code Current Lot Size Example of Current $ Minimum
trade size* (S$)
New Lot Size Example of Minimum
$ trade size effective
17-Jan-221 (S$)
STI ETF ES3 10 31.48 1 3.15
Lion-OCBC Sec HSTECH US$ HST 10 10.13 1.01
GLD US$ O87 5 826.55 165.31
IS ASIA HYG US$ O9P 5 42.9 8.58
Nikko AM STI ETF G3B 10 31.8 3.18
NikkoAM-STC Asia REIT CFA 10 10.93 1.09
NikkoAM SGD IGBond ETF MBH 10 10.38 1.04
ICBC CSOP CGB ETF US$D CYB 10 109.2 10.92
ABF SG BOND ETF A35 10 11.62 1.16
LION-PHILLIP S-REIT CLR 100 107 1.07

Source: SGX, Refinitiv, Bloomberg (Data as of Nov 30, 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.

ALSO READ: Investing in Exchange Traded Funds (ETFs): A newbie's guide to getting started

Let’s use the SPDR STI ETF priced at $3 as an example.

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

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

Top 10 traded ETFs in 2021 YTD Stock Code Minimum
Bid Size
Current Forced Order Range in per cent1 New Forced Order Range in per cent
STI ETF ES3 0.001 1.00 per cent 10per cent
Lion-OCBC Sec HSTECH US$ HST 0.001 3.00 per cent
GLD US$ O87 0.01 0.20 per cent
IS ASIA HYG US$ O9P 0.01 3.50 per cent
Nikko AM STI ETF G3B 0.01 9.40 per cent
NikkoAM-STC Asia REIT CFA 0.001 2.70 per cent
NikkoAM SGD IGBond ETF MBH 0.001 2.90 per cent
ICBC CSOP CGB ETF US$D CYB 0.01 2.70 per cent
ABF SG BOND ETF A35 0.001 2.60 per cent
LION-PHILLIP S-REIT CLR 0.001 2.80 per cent

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

This article was first published in Seedly. All content is displayed for general information purposes only and does not constitute professional financial advice.

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