SGX Overhauls Trading Landscape with New Custody Model, Bid Rules, and Micro Board Lots

By Decode Today News

SGX to roll out post-trade custody model, changes to bid mechanics in July, cut board lots in October Decode Today

The Singapore Exchange (SGX) is rolling out a series of significant reforms aimed at modernizing its market infrastructure, enhancing accessibility for retail investors, and aligning its practices with global financial standards. These strategic changes, encompassing a new post-trade custody model, adjustments to bid mechanics, and a dramatic reduction in board lot sizes, are scheduled to take effect in July and October, promising a more inclusive and attractive trading environment for both local and international participants.

Major Reforms Set to Transform SGX Trading

The Singapore Exchange is implementing three key changes: a new post-trade custody model allowing omnibus broker accounts from July 15, revised minimum bid sizes for foreign currency securities on the same date, and a significant reduction in standard board lot sizes from October 5. These measures are designed to increase market participation, improve affordability for retail investors, and align Singapore's financial infrastructure more closely with international practices, following broad support from market participants during public consultations.

New Custody Model to Boost International Appeal

From July 15, the SGX will permit depository agents to hold SGX-listed securities on behalf of their clients within omnibus broker custody accounts. This move is a direct response to the growing trend of such accounts, with SGX noting that six broker custody accounts were opened for every direct account with the Central Depository (CDP) between October 2024 and April 2026. An omnibus account consolidates the assets and trades of multiple clients under a single broker, streamlining operations and potentially offering greater efficiency. The bourse highlighted that this shift is crucial for bringing Singapore's custody structure in line with prevalent global practices. This alignment is expected to significantly enhance Singapore's appeal to international intermediaries, fostering a more competitive and globally integrated financial ecosystem. For investors, particularly those leveraging brokers, the change offers additional choices in how their assets are managed and held. To safeguard retail investors utilizing these broker custody accounts, SGX's regulatory arm, Singapore Exchange Regulation (SGX RegCo), will impose enhanced requirements and oversight on depository agents. Furthermore, minimum service standards will be implemented for brokers and depository agents, specifically designed to facilitate clients' exercise of shareholder rights. These standards will address critical aspects such as the handling of corporate actions and assisting clients with attendance at shareholder meetings, ensuring that retail investors are well-served regardless of their chosen custody method. Depository agents, subject to SGX RegCo's approval, will be given time to comply with these new standards, which must be in place by the end of the year.

Lowering Barriers with Reduced Board Lots

In a move set to significantly improve affordability and market participation for retail investors, the SGX will reduce its standard board lot size from October 5. Currently, instruments are typically traded in lots of 100 units. The upcoming change will see this standard reduced to 10 units for instruments priced above S$10 and up to S$100. For higher-value instruments, those priced above S$100, the board lot size will be drastically cut from 100 units down to a single unit. This means investors will be able to buy single units of high-priced stocks, making entry into premium segments of the market far more accessible. The initial phase of this reduction will apply to 11 selected stocks currently priced above S$10. These 11 instruments alone accounted for a substantial 35 percent of all trading activity in the first six months of this year, indicating the broad impact this change is expected to have. By lowering the entry barrier, the SGX aims to democratize access to the market, allowing more retail investors to diversify their portfolios or invest in companies that were previously out of reach due to high per-lot costs. The SGX has also outlined a clear review process for future adjustments. Quarterly reviews will be conducted to identify additional instruments that qualify for a reduced board lot size, with the next review scheduled for January 2027. These reviews will consider daily close prices recorded from July to December 2026. Any subsequent changes to board lot sizes will be announced within the first five trading days following the end of each calendar quarter and implemented within the first five trading days of the second month after that quarter. Importantly, the board lot size reductions, once applied, will remain in effect even if the stock prices fall below the S$10 and S$100 thresholds, providing stability for investors.

Adjustments to Bid Mechanics for Foreign Currency Securities

Simultaneously with the custody model rollout, the SGX will also implement changes to the minimum bid sizes for certain foreign currency-denominated securities contracts listed on its exchange. From July 15, the minimum bid sizes for Hong Kong dollar, renminbi, and yen-denominated securities will no longer be strictly aligned with those in their respective home markets. This adjustment provides the SGX with greater flexibility in setting bid sizes tailored to the specific liquidity and trading dynamics within its own market. The SGX has committed to communicating these changes to its members in advance through official circulars, ensuring market participants are well-informed.

A Unified Vision for Market Evolution

These comprehensive changes are not isolated measures but rather a strategic package designed to enhance the overall competitiveness and attractiveness of Singapore's capital markets. The SGX highlighted that all these proposals garnered broad support from market participants during public consultations, underscoring a collective industry consensus for these reforms. By aligning with global custody practices, improving market affordability, and optimizing trading mechanics, Singapore is actively working to cement its position as a leading financial hub in Asia and on the world stage. These initiatives are poised to create a more vibrant, liquid, and accessible market for a diverse range of investors.

Frequently Asked Questions

What is an Omnibus Broker Custody Account?

An omnibus broker custody account allows a single broker or depository agent to hold the assets and facilitate trades for multiple clients under one consolidated account. This system is widely adopted globally and streamlines administrative processes while still ensuring individual client ownership rights are managed.

How will the new board lots affect investors?

The reduction in board lot sizes, especially for higher-priced instruments where investors can buy as little as one unit, will significantly lower the capital required to purchase certain stocks. This improves affordability and allows retail investors to more easily diversify their portfolios, invest in blue-chip companies, or participate in segments of the market previously considered too expensive.

Why are these changes being made now?

These changes are being implemented to align Singapore's market practices with global standards, particularly regarding custody structures, and to enhance market accessibility and affordability for retail investors. The reforms follow extensive public consultations, which indicated strong market support for these modernizations.

Paving the Way for a More Inclusive Market

The upcoming reforms by the SGX represent a forward-looking strategy to evolve its trading infrastructure and deepen its market. By adopting a globally recognized custody **model**, reducing board lot sizes to make investing more affordable, and fine-tuning bid mechanics, the SGX is not just responding to current market trends but proactively shaping its future. These initiatives are expected to attract a wider pool of both local and **international** investors, fostering greater liquidity and dynamism, and ultimately reinforcing Singapore's standing as a robust and accessible **global** financial center. The focus on retail investor protection and continued quarterly reviews demonstrates a commitment to an adaptive and user-centric market environment.

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SGX Overhauls Trading Landscape with New Custody Model, Bid Rules, and Micro Board Lots