Singapore Exchange's
securities market reopens after disruption
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[July 15, 2016]
By Aradhana Aravindan and Marius Zaharia
SINGAPORE (Reuters) - Trading in the
Singapore securities market resumed on Friday after the fourth major
interruption on the exchange in the past two years, piling pressure
on CEO Loh Boon Chye as he tries to rejuvenate a bourse facing stiff
competition in the region.
The Singapore Exchange Ltd <SGXL.SI> said securities trading was
suspended just before midday on Thursday due to duplicate trade
confirmation messages being generated. After having to delay planned
resumptions twice, the exchange closed the market for the day.
Singapore's central bank said it took a serious view of the closure
and would decide on regulatory action after the bourse had submitted
its investigation report.
In a conference call with the media on Friday, Loh said the
disruption was caused by a hardware issue, but gave few additional
details and declined to say if any individual or department will be
held accountable.
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"It was triggered by hardware ... and we are focused on reviewing
... any gaps there may be in our recovery process," said Loh, who
completed his first year at the bourse on Thursday.
The amount of short selling - by which an investor borrows a
security and sells it in the hope that it can buy it back at a lower
price - which could have caused losses for investors was
"insignificant", he said. The bourse will waive buy-in penalties for
short-sellers who were unable to cover their positions on time due
to Thursday's market outage.
SGX shares fell 0.6 percent, underperforming the Straits Times Index
<.STI>, which was up 0.6 percent.
The latest interruption adds to challenges faced by Chief Executive
Loh, as the SGX battles lackluster securities trading volumes and
tries to improve scrutiny on trading activities following a penny
stock crash in 2013.
"It's obviously a dent to their reputation," said OCBC head of
research Carmen Lee.
The exchange said challenges in reconciling the missing and
duplicate messages resulted in a longer process than expected.
"We sincerely apologize for the market disruption. Our recovery time
has to be better and we must minimize downtime for market
participants," Loh said.
Loh later said in a statement that SGX would update with more
details, including the cause, by next week.
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A Singapore Exchange logo sits outside their head office in
Singapore April 22, 2015. REUTERS/Edgar Su/File Photo
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While Singapore is Asia's leading venue for foreign exchange trading and has
grown as a derivatives center, the average daily value of shares traded on its
exchange is less than the Thai bourse's and trails far behind rivals in Hong
Kong and Tokyo.
TECH ISSUES
The SGX has suffered technical troubles in the past, including in August last
year, when trading on the derivatives market was temporarily suspended.
The exchange was hit by two disruptions in 2014, caused by a software error and
a power failure, which led to a rebuke by the Monetary Authority of Singapore -
the city state's central bank and SGX's regulator.
Loh named Nasdaq <NDAQ.O> as its "technology partner for many years".
As part of its efforts to boost revenue streams, the SGX is in exclusive talks
to buy London's Baltic Exchange.
"Perhaps the exchange should refocus on its local operations and put on hold any
bids for expensive foreign bourses," said Mano Sabnani, former DBS Bank managing
director and former CEO and editor in chief of local newspaper Today.
"Management should also be held accountable for the embarrassing stoppages."
(Additional reporting by Saeed Azhar and Jongwoo Cheon; Editing by Shri
Navaratnam and Sam Holmes)
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