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Singapore central bank, SGX launch probe into penny stocks crash

Thursday, 24 Oct 2013 | 7:35 AM ET

SINGAPORE, Oct 24 (Reuters) - Singapore's central bank said it is conducting an extensive review with Singapore Exchange Ltd (SGX) of recent share price volatility in three inter-linked Singapore companies, but said the operations and financial positions of broking firms exposed to those stocks remain sound.

"MAS has been closely monitoring the exposure of the broking firms by collecting reports on losses and major counterparty exposure arising from their exposures to the three counters," the Monetary Authority of Singapore told Reuters in an e-mail response to questions.

"The operations and financial positions of the broking firms remain sound. We will continue to monitor the situation closely."

SGX suspended trading in shares of Blumont Group Ltd , Asiasons Capital Ltd and LionGold Corp Ltd on Oct. 4 after sharp declines in their stock prices wiped billions of dollars in market value off the three firms.

Traders have said several brokerages in Singapore could lose millions of dollars following those big price falls.

"MAS and SGX are conducting an extensive review of the activities around these stocks," the MAS said. "This episode has also surfaced broader issues regarding the market structure and practices which MAS and SGX intend to review thoroughly. Upon completion of the review, we will consult the public if changes are required."

(Reporting by Anshuman Daga and Rachel Armstrong; Editing by Ian Geoghegan)

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