The Singapore Exchange's revision to its minimum bid schedule will be welcomed by retail investors. At least, those who really understand what the point is of restricting bid sizes for stocks priced above certain levels. For example, stocks which are priced between S$5 and S$10 could previously only be traded in increments of S$0.05 (five cents, in everyday language). And stocks which traded above S$10 could previously only move up and down in increments of S$0.10. Now, stocks between S$1 and S$10 can be traded in 1 cent increments, and stocks above $10 in 2 cent increments (table below).

Big deal! Why we need to have these minimum bid sizes anyway, rather than let every stock be traded in 1 or half cent increments is beyond me. These things aren't an issue in other markets - why should they be an issue here?!
But what the revisions, announced September 19, really missed in my view was a revision of the minimum board lot nonsense. I am yet to come across a decent explanation why stocks can only be traded in lots of 1,000. This is possibly the biggest barrier to retail investors than anything else. For example, I just checked the price for DBS, and it last traded at S$22.50. In other words, the minimum investment in DBS is S$22,500. SingTel and SIA have gone around this issue by offering smaller board lots (example: SIA 200).
Arguments in favour of preset board lots usually centre around the inefficiency created when someone is trying to sell, say, 429 shares in OCBC, and there are two buyers of 185 and 344 shares respectively. I fully understand that this gets messy very quickly as to whose order gets filled, and what happens when half-filled orders need to get filled. But other markets around the world can cope with this. Why can't ours?
But let's assume we retain a minimum board lot system, so we retain a semblance of order. Why does the minimum board lot need to be 1,000? Everyone has a different view on what the minimum board lot size needs to be. Assuming a stock is priced at 65 cents, you need S$650 to buy one lot. This is too much for some, pittance for others.
I've heard some reasons why board lots are maintained at 1,000: because large cap companies don't want a large body of "riff-raff" of retail investors on their share registry. A high barrier-to-entry assures only people who can afford to throw S$22,500 at a time will "graduate" to their registry. But I didn't hear DBS complain about too many retail investors on its registry when its stockprice was just S$9 a few years ago.
Another reason I've heard: the SGX wants to promote trading of warrants, and by making it more affordable to trade warrants covering DBS they are providing an avenue to track its price without buying the underlying stock. Again, I find this hard to believe, given the risky nature of warrants compared to stocks.
Solution to all this: pick a low board lot size - say, 100 - so you retain the order board lots present, while making stocks more affordable to everyone. Sure enough, the 65 cent stock example above translates into an investment of just $65. Trading commissions already come up to at least S$25. But at least more people will be able to buy DBS for $2,250 or more, rather than $22,500.

What are your thoughts?
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Mark Laudi