Securities industry group completes review of market disruptions, makes recommendations

A SECURITIES industry working group that was convened after a July 2016 market outage is recommending that Singapore Exchange (SGX) adopt clearer continuity plans and maintain closer coordination with the industry and service providers.

SGX is accepting all of the working group's recommendations, and has already implemented three of them: establishing a master record of data; providing clarity on the timing and principles of market closure and resumption; and establishing a protocol for assuming trades.

The group, whose 14 members were drawn from broking houses, the investment community, software vendors, independent experts and SGX, was tasked in September 2016 to assess and recommend ways to improve the resilience of Singapore's securities market.

Its six recommendations are:

1. SGX should maintain a master record of all trade data with a clear hierarchy based on the source of the data, and uncorrupted data should be made readily available for broking houses during an outage;

2. By the first half of 2017, SGX should establish industry trade management and recovery standards, to which brokers must adhere;

3. SGX should try to keep markets open whenever possible, but should establish clearer guidelines on when to close markets and reopen markets;

4. Trades affected by ambiguities during a disruption should normally be cancelled, but clear principles should be followed if SGX decides to assume those trades;

5. SGX should improve communication to brokers as well as brokers' designated technical vendors during a market disruption; and

6. SGX should widen the scope and reach of continuity tests.

SGX said it has implemented recommendations 1, 3 and 4 - on data corruption, market closure and resumption, and on trade assumption - with immediate effect. It is an executive steering group comprising SGX and broker members, assisted by technical and non-technical working groups, to implement the remaining three recommendations.

Full implementation may take 18 to 24 months, SGX said.