Singapore stocks on the LSE

Barring any last-minute glitches, the London Stock Exchange will be launching trading in major Singapore-listed stocks on Monday 19th November, as part of a cross-listing agreement announced in July. Reciprocal trading in FTSE 100 stocks on the Singapore Exchange is intended to start in the first half of 2013.

There will be 37 Singapore stocks initially (Straits Times Index and MSCI Singapore Free constituents) and trading will be on the LSE’s new International Board. This is distinct from the International Order Book (where depository receipts trade) and the European Quoting Service and European Trade Reporting Service, the new MiFID services that have replaced the old International Retail Service.

We’ll have to wait to see how this develops, but my first instinct is that the benefits for investors will be limited. While the Singapore stocks will trade during LSE hours on the new board and clearing for these trades will be done via LCH.Clearnet, settlement will be through the Singapore securities depository, rather than through CREST, the UK’s own system. So LSE member firms who want to trade these will need to have “direct membership or a relationship with a settlement agent who has membership of SGX’s Central Depository Pte Limited (CDP)”, according to the LSE’s guide to the service.

This doesn’t suggest that existing LSE brokers will just be able to trade Singapore stocks – they will need to put the CDP arrangements in place. And while I may be wrong, my impression would be that any broker who was really interested in being able to offer Singapore stocks to their clients would already have established ties with a broker in Singapore to be able to trade on SGX.

I may be wrong – it may have an impact and it may be the precursor to more agreements that bring more companies to the International Board. But on first glance, it seems very plausible that:

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