An article from R. Sivanithy in the Business Times (Singapore) about the Ocean Sky International, its share price crashing about 50% in a single day.
"At 2pm, after the shares had collapsed nine cents or 31 per cent to 20 cents, OSI requested a trading halt pending release of an announcement."
When was it exactly known that the deal with Ezion was off? If it was known more early, why did OSI not request the trading halt more early? Who were the sellers who sold that day before the trading was halted? The volume was clearly higher than the days before.
The article further zooms in on errors that the SGX made:
The problem is that - incredibly - SGX sent its standard template asking OSI to explain the substantial increase in its share price when it should have asked about the decrease.
Sixteen minutes later, at 1.52pm, possibly because it realised its error (though this is not explicitly stated), SGX issued a notice to ignore the previous query but did not mention anything else.
At 2pm, after the shares had collapsed nine cents or 31 per cent to 20 cents, OSI requested a trading halt pending release of an announcement.
At 2.07pm, seven minutes after the shares were suspended and 15 minutes after withdrawing its earlier query, SGX sent off its standard query template but with "decrease" mentioned in place of "increase". Some seven hours later, at 9.04pm, Ezion said in a filing that the deal had been terminated. This was followed a minute later by OSI filing the same announcement.
SGX's queries, including its blunder, raise questions over just how vigilant its surveillance really is, and highlights how far behind the curve it operates. Even if it had asked the right questions at 1.36pm, thus satisfying its brief as mainly a signaller of caution to the market, it would have made almost no difference - OSI's shares, at 21.5 cents at that time, had already crashed spectacularly.
Furthermore, the correctly worded query was issued seven minutes after the company suspended trading. So it carried no signalling or informational value whatsoever because nobody could have acted on it even if they had wanted to.
It is therefore difficult to refute the widely held belief that the exchange's archaic querying process as it stands today is weak and ineffective. Fortunately, the process is currently under review and proposals to raise the surveillance and querying bar were issued for public consultation last week.
If the exchange and regulators wish to redeem themselves, they should embark on a thorough investigation of the hurried sales which hit the market on Wednesday during the five hours of trading from 9am to 2pm.
Hopefully, when this is actually done, the findings will be divulged quickly. Wait too long and the incident will slip quietly into the annals of the local market's history - which is teeming with similar cases over the years that appear to have escaped official scrutiny.