The Monetary Authority of Singapore (MAS) has ordered the Singapore Exchange (SGX) to implement measures to enhance its recovery processes and operational resilience following a supervisory investigation into a trading disruption that affected the securities market on Jul 14, 2016.
The incident saw trading suspended for more than half a day and was traced to a hardware problem, the SGX CEO said a day after the disruption.
MAS said it has accepted an industry working group’s recommendations on measures that need to be taken and directed SGX to implement them within 24 months. This will involve changes to systems and processes of both SGX and brokerage firms, MAS noted.
SGX will contribute S$1.5 million to co-fund the costs that may be incurred by brokerage firms in implementing the measures.
The industry working group - made up of SGX and industry stakeholders - recommended that the bourse make improvements in areas such as the restoration of corrupt data, market recovery procedures, market closure and resumption timelines, trade assumption, incident communication and business continuity scenarios.
“MAS has determined that while SGX has met its primary obligation as an exchange to maintain fair, orderly and transparent markets, it did not restore the proper functioning of its critical system within four hours as required by MAS,” the regulator said.
It noted that SGX has since taken steps to address the hardware and software errors which led to the trading disruption.
“MAS takes a serious view of trading disruptions. Technology system-related breakdowns can never be zero-probability occurences and this is why SGX should strengthen its recovery process," said deputy managing director of financial supervision at MAS, Ong Chong Tee. "Both SGX and brokerage firms have a shared responsibility to establish clear processes for timely recovery of our securities market in the event of an incident."