Box Story 8: Improving Individual Investors' Access to Singapore Government Securities (SGS) and Treasury Bills (T-Bills)
From its early days, MAS has been committed to enhancing public access to the Singapore Government Securities (SGS) market. Over the years, demand for SGS from individual investors has grown as a result of MAS' efforts to improve price transparency, increase financial awareness and extend the yield curve of SGS and Treasury Bills (T-bills).
The SGS market has gone through significant developments over the past seven years. Since 2002, MAS has lowered the minimum denomination for purchasing SGS from $10,000 to $1,000 to better enable individual investors to participate in the Singapore bond market. The same year, we launched the SGS website to increase investors' access to information, and introduced non-competitive bidding in primary auctions to level the playing field for individual investors that may have relatively less information on the SGS market. We also worked with the Primary Dealer banks to publish SGS market commentaries on the SGS website to improve public access to market views.
In 2005, MAS established an electronic, over-the-counter bond trading platform in conjunction with Bloomberg to increase price transparency and accessibility to different classes of investors. The following year, we worked with the Central Provident Fund (CPF) Board to enable individual investors' CPF funds to be fully utilised to purchase SGS bonds. In addition, we converted weekly SGS Treasury bill auctions from the multiple price auction format to uniform price auctions, which facilitated greater participation from individual investors. (SGS Bonds had been converted earlier in April 2003.)
In 2007, the CPF Board allowed members to use their Ordinary Account or Special Account savings to invest in Singapore Government Treasury Bills. MAS amended the Government Securities Regulations to allow SGS investors to make more than one non-competitive application at SGS auctions. We also admitted the Central Depository Pte Ltd into MEPS+ as an SGS member, which works as the first step to enabling individual investors to consolidate all their Singapore Dollar equities and SGS holdings in a single account.
As the next step, MAS will work with financial institutions to improve market access infrastructure for individual investors. From July 2009 onwards, individual investors will be able to apply for SGS and T-bill auctions at major Automated Teller Machine (ATM) networks islandwide, instead of applying personally at bank branches. In addition, individuals may custodise their SGS and T-bills holdings with the Central Depository, which will make it more flexible for them to purchase and sell SGS and T-bills in the secondary market.