Contra trading to be phased out?
On 22 April 2016, Singapore central bank and white-collar police raided 4 local brokerages for possible breaches of securities law. It was reported that one remisier each from OCBC Securities and DBS Vickers were taken for questioning by the authorities. When this news broke, it took the market by storm and left investors wondering which stock counters had been involved.
This latest episode reveals another dark chapter in Singapore stock market following the epic penny stock crashes of Asiasons, Blumont and Liongold in 2013. Back then, the authorities investigated the three companies for possible insider trading or market manipulations after $8 billion dollars were wiped out in two days of trading. The scandal in 2013 led SGX to implement a number of market reforms to safeguard investors’ interests.
Among the new measures implemented were minimum trading price of $0.20, daily short-selling reporting and new reporting requirement of shares transactions by major shareholders. It was also proposed that by mid-2016, contra trading will be phased out. I personally feel that the removal of contra trading is too draconian because fundamentally, there is nothing wrong with contra trading. This activity, although speculative in nature, allows flexibility and market liquidity. Of course, like all things in life, there will always be black sheep who attempt to abuse the system. So I sincerely hope that this move will not materialize as I had made thousands of dollars from contra trading in the past.
At this point of time, it should be highlighted that OCBC Securities and DBS Vickers are not involved because only their remisiers, and not dealers, are under investigation. Unlike dealers, remisiers are self employees not drawing salaries from the brokerages and their incomes are based on commission.
Two very important lessons for all stock investors to be learned from this investigation. Firstly, there will always be market risk when you invest in stocks, never mind whether it is a blue chip or penny stock. Hindsight is always 20/20 and you can never predict a Black Swan event like the Baring Bank or Lehman Brother collapse. If you have the money to invest in stocks, make sure you diversify some funds to other important asset classes like gold and silver bullion.
Many people wonder where to buy physical gold in Singapore from reliable bullion dealers at competitive prices. In Singapore, you can choose to buy gold and silver bullion from BullionStar, one of the largest bullion dealers with more than 370 bullion products. The company has a unique retail shop, vault and advanced online system providing a one-stop shop for wealth builders to view, online purchase, collect, deposit, store, value, sell, audit or physically withdraw bullion.
BullionStar also offers customers their own minted gold and silver bars with zero spread. They have commissioned world-renowned LBMA-approved Swiss gold refiner Argor-Heraeus to produce these stylish and unique minted 100 gram 99.99 % purity gold bars.
Secondly, being retail investors, we will always be at the losing end because of limited access to data and insider trading. Indeed the odds is stacked against retail investors because the market will always be controlled by the big players, the so-called “whales”. So unless you have the tools to aid you in spotting the big boys movements, you are unlikely to make money from stocks.
Local finance blogger, Dave, seeks to address this gap by providing readers his market analysis. Watch how the guru strategize and learn from him on how to trade. This blogger has a passion in trading and like me, understood the importance of respecting the big boys’ movement. Some features of his membership website:
1)My Daily Potential Trades
2)My Daily Trend Analysis
3)My Spotting of Big Boy’s Movement – Unique and Powerful!!
4)My Weekly Trend Analysis
5)My Weekly Dow Component Analysis
6)My Recent Trade Summary
7)Strategies to use in different situations
8)Entries, Stop Loss and Targets
9)Exclusive Articles of unique movements
10)Wealth eBooks specially written for VIP Traders
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