Singapore’s stock market has long carried a paradox: it hosts one of Asia’s deepest pools of asset management capital, yet a large share of its listed companies trade so thinly that institutional investors struggle to build or exit positions without moving prices. The Monetary Authority of Singapore (MAS) is now addressing that gap head-on with a targeted market-making grant that goes directly to the segment where liquidity is most fragile—small- and mid-cap stocks outside the Straits Times Index.
A Grant Designed for the “Middle Segment”
On 29 September 2026, MAS committed S$20 million from the Financial Sector Development Fund to a new GEMS Market Making Grant under the Grant for Equity Market Singapore scheme. The grant supports appointed market makers in providing trading liquidity for an initial group of around 80 eligible small- and mid-cap stocks, as well as newly listed shares, through 31 December 2028. Crucially, the eligible universe is not the smallest, most speculative tail of the market. MAS describes the target as stocks with “a minimum level of trading activity and higher execution costs compared to the Straits Times Index average”. This is the “missing middle”—companies that are large enough to matter to portfolio managers but too small to attract continuous two-sided quoting without external incentive.
Why the Middle Matters More Than the Headline Index
The STI can post record highs while dozens of listed companies go days without meaningful turnover. That divergence is not merely an inconvenience for retail traders. For founders, private equity backers and growth companies weighing an IPO, thin aftermarket liquidity turns a public listing into a place where shares exist but rarely change hands at a fair clearing price. The grant aims to narrow that gap by facilitating tighter bid-ask spreads, lowering execution costs and strengthening price discovery. When a market maker quotes continuously, the cost of immediacy falls. When spreads compress, the effective hurdle rate for institutional participation drops. The intervention is therefore less about “pushing prices up” than about making the market function as a price-discovery mechanism rather than a sporadic auction.
The Real Test: Durability Beyond the Subsidy
Market making is not a permanent crutch. The S$20 million is a time-bound incentive designed to seed liquidity until natural two-sided interest develops. The risk is that quoted spreads tighten while genuine investor demand remains unchanged—producing an orderly-looking screen with little depth behind it. MAS has signalled that the eligible stock list will be reviewed regularly to add counters that can benefit from enhanced support, which suggests a phased, evidence-based roll-out rather than a blanket subsidy. The grant’s success will be measured not by how many stocks receive quotes, but by whether those stocks begin to attract broader institutional and retail participation after the initial quoting phase.
A Wider Ecosystem Play
The market-making grant is one pillar of a much larger architecture. The Equity Market Development Programme has already allocated S$5.4 billion across 14 asset managers, and trading activity has picked up, with average daily turnover exceeding S$2 billion—more than 40% higher than in 2025. Turnover among the Next 50 constituents has risen 93% from 2025, indicating that the liquidity conversation is beginning to extend beyond the largest names. Market making alone cannot transform an illiquid stock into a liquid one. But paired with demand-side capital and improved research coverage, it can shorten the distance between a listed company and the investors who might otherwise ignore it.
