Structured warrants are a popular financial product with market participants. Trading volume on the SGX rose to around 52 billion units in SGX's FY2006, a jump of 169% from FY2005. The buoyant market in structured warrants has attracted those who seek financial gain through illegal means.
In November 2006, MAS took civil penalty enforcement action against three trading representatives of a stock brokerage firm for rigging the share price of a company listed in Singapore. The three individuals first took a short position in the structured warrants of the company. They then deliberately depressed the company's share price, which resulted in a fall in the warrant price, allowing them to cover their short positions at a profit.
The three individuals paid S$210,000 in civil penalties to MAS, and had their representative licences suspended for one year. This case is a clear indicator of MAS’ vigilance against market abuse of the newer financial products.
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