Singapore Creates Group With Aim to Improve Market Stability (1)

(Bloomberg) -- Singapore Exchange Ltd. said it has formed a committee to look at ways to improve the operational resiliency of its markets.

SGX created the Securities Industry Working Group in consultation with the Monetary Authority of Singapore, it said in a statement Tuesday. The group will be led by Ho Tian Yee, a DBS Group Holdings Ltd. board member. Twelve other people make up the group, including executives from CIMB Securities, Morgan Stanley Asia, the Investment Management Association of Singapore, PricewaterhouseCoopers LLP and SGX. The committee will submit recommendations to the MAS by the first quarter.

The move comes almost two months after Singapore’s stock market was closed for most of the day due to a technical malfunction. That breakdown was at least the third at the exchange operator in the past year, after a near two-hour disruption in derivatives trading in August 2015 and a one-hour halt in October. The failure to restart the market in July put particular focus on SGX’s systems and back-up plans.

“Computers will break down, software will malfunction, the important thing is finding out how best to deal with the situation when it happens,” David Gerald, chief executive officer of the Securities Investors Association Singapore and a member of the new group, said by phone. “We definitely want to help with the process and give feedback.”

More Needed

The July 14 halt, which saw the exchange suspend stock trading at 11:38 a.m. for the rest of the day, angered traders and put pressure on SGX officials. It failed to follow through on two pledges to reopen during the afternoon. Loh Boon Chye, the bourse’s CEO, issued an apology the next day, promising to do better and saying the company will be accountable.

The daily average value of securities traded dropped 37 percent to S$936 million ($695 million) in August from a year ago, the bourse said Wednesday.

Areas of review for the working group will include the provision of back-up systems, protocols and processes to reconnect in the wake of a disruption, as well as business continuity planning, according to the statement. The group will take into account feedback from SGX’s investigation of the July 14 halt.

“The intention is good but whether it will help minimize trading disruptions in the future, it’s hard to tell,” Jimmy Ho, president of the Society of Remisiers in Singapore, said by phone. “They probably need more IT experts and technical people.”

Loh has been listening to his customers and trying to look into the issues affecting the industry, Ho said.

(Updates with daily trading average in sixth paragraph.)

--With assistance from Nicholas Reynolds To contact the reporters on this story: Andrea Tan in Singapore at atan17@bloomberg.net, Jonathan Burgos in Singapore at jburgos4@bloomberg.net. To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Stephanie Phang

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