Key facts
- Singapore Exchange's SDR program has seen sluggish trading volumes since its July launch.
- Only $2.3 million of SpaceX SDRs traded between July and September 18, a fraction of its US volume.
- Grab and Sea SDRs traded $24 million in the same period, compared to $26 billion in US markets.
- Rival products and investor unfamiliarity are cited as reasons for low uptake.
- Nasdaq and NYSE Arca plan a 24-hour US stock trading program launch on December 6.
- The London Stock Exchange is set to launch its own 24-hour trading program in the first half of next year.
Singapore's initiative to allow trading of US stocks during Asian hours has encountered a sluggish start, with low volumes indicating challenges in attracting traders. The Singapore Exchange (SGX) introduced its Singapore Depository Receipts (SDR) program in July, listing shares in Grab, Sea Ltd, and SpaceX. However, trading volumes for these SDRs have been minimal compared to their US counterparts. For instance, only $2.3 million worth of SpaceX SDRs changed hands by September 18, a tiny fraction of the roughly $1.6 billion in daily turnover for SpaceX stock on Nasdaq. Similarly, Grab and Sea SDRs saw $24 million in trades, vastly overshadowed by the $26 billion traded in the US.
Industry observers attribute the low uptake to several factors, including the late entry into a market already crowded with alternative products offering 24-hour US stock trading. Chris Forbes, head of Asia and Middle East at CMC Markets in Singapore, described the rollout as 'anticlimactic,' noting that 'everyone else has developed alternatives.' Global exchanges are increasingly moving towards round-the-clock trading, with Nasdaq and NYSE Arca set to launch their programs on December 6, and the London Stock Exchange planning its own launch in the first half of next year.
Carmen Lee, head of equity research at OCBC, pointed out that local investors are generally more familiar with locally listed firms and are still getting acquainted with SDRs. Furthermore, these SDRs are not currently included in major benchmarks like the Straits Times Index or MSCI indexes, which may limit their appeal to institutional investors. Despite the slow start, Luke Lim, managing director at Singapore brokerage Phillip Securities, which issues SDRs by holding underlying stocks in trust, anticipates launching more listings.