Oral Reply to Parliamentary Question on Trading Fuelled by Online Discussions
MAS and SGX: Beware of risks related to trading incited by online discussions
Singapore, 2 February 2021... The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) advise the investing public to be on heightened alert to the risks related to trading in securities incited by online discussion forums and social media chat groups. This follows SGX RegCo’s 10 December 2020 warning to the public of “pump and dump” activities exploiting Telegram chats and other social media channels (link ).
2 MAS and SGX RegCo have noted investor interest in Singapore in recent activities in US markets relating to stocks such as GameStop, AMC Entertainment Holdings, and BlackBerry. Discussions in online websites and platforms suggest the possibilities for similar speculative activities in the Singapore stock market.
3 The public should be aware that certain individuals may exploit this interest for their own benefit through “pump and dump” activities that can amount to market misconduct under the Securities and Futures Act (SFA):
i. These perpetrators may do so by setting up positions in certain securities. They then use social media chat groups to incite investors to buy these securities in a manner similar to how individual investors collectively pushed up certain share prices in the US.
ii. As soon as the prices of these securities have risen to specific levels, such perpetrators may then sell the securities which they had accumulated earlier without alerting other investors.
4 Any conduct that intentionally, knowingly, or recklessly creates a false or misleading appearance regarding the active trading, market or price of securities is prohibited under the SFA. Other prohibited acts include but are not limited to the making or dissemination of false or misleading statements, fraudulent inducement to deal in securities, and the employment of manipulative and deceptive devices. Investors should make sure they refrain from conduct that could infringe the SFA. Firm action will be taken against those who breach the SFA or other laws and regulations.
5 MAS and SGX RegCo are closely monitoring market activities for signs of false trading or other forms of misconduct. Restrictions may be placed on the trading accounts of those suspected of such misconduct and the relevant securities may be placed under designation or suspension. MAS and SGX RegCo are working closely with SGX member firms to ensure our market remains orderly.