Singapore Exchange to remain closed for day after malfunction

Duplicate trade confirmation messages cause fourth market outage in last two years, stops trading in shares like DBS Group, Singapore Airlines

PUBLISHED : Thursday, 14 July, 2016, 5:53pm
UPDATED : Thursday, 14 July, 2016, 11:00pm

Singapore Exchange has decided to halt stock trading for the rest of Thursday, after a technical malfunction caused a stoppage earlier in the day.

The bourse said the suspension, which began at 11.38am local time, was caused by duplicate trade confirmation messages. SGX initially said it expected to reopen at 2pm local time, but later pushed that back to 4pm before announcing that trading would not resume Thursday.

Andrew Sullivan, managing director of sales trading with Haitong International Securities Group in Hong Kong had earlier in the day said: “If they don’t get it going today then people are going to be very upset. The stoppage hurts SGX’s credibility and reputation as an international market that can cope with any kind of situation.”

Thursday’s stoppage is the second malfunction of SGX’s systems in the past year, after a near two-hour disruption in derivatives trading in August due to a technical fault.

In 2014, the Monetary Authority of Singapore reprimanded SGX for two trading disruptions, a blow for the bourse operator under former chief executive Magnus Bocker. He pledged to review the exchange’s processes to prevent a recurrence. In July 2015, Bocker was replaced by Loh Boon Chye, the former head of Asia-Pacific global markets at Bank of America.

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“Given the change in the CEO and that this has happened again, there may be a bigger problem facing SGX and its back-end systems,” said Bernard Aw, a market strategist at IG Asia. “Some investors could potentially suffer losses if prices move significantly when trading resumes.”

Singapore Exchange is home to Southeast Asia’s largest stock market, with total capitalisation of US$494 billion, according to data compiled by Bloomberg. About S$1.6 billion of shares changed hands on an average day in the past 12 months. The exchange maintains a monopoly on stock trading in Singapore.

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Among the equities that were halted were DBS Group Holdings and Singapore Airlines.

“This should have been sorted as it happened a few years back as well,” said Alex Wijaya, a senior sales trader at CMC Markets. “The communication and handling of this incident could have been better.”

Technical errors in trading occur from time to time in today’s financial markets, which are largely automated. Malfunctions at Deutsche Boerse, Europe’s biggest derivatives exchange, disrupted trading in February and July 2015, while there was a one-hour halt in trading on Euronext’s derivatives products in March last year. The New York Stock Exchange had an outage a year ago that lasted three-and-a-half hours.

“It’s unforeseen and nobody likes this,” said Melinda Sam, chief executive officer of the Securities Association of Singapore. “We just hope that SGX can improve on the technology.”