Singapore Exchange Blames Faulty Disk for Market’s Trading Halt

(Bloomberg) -- Singapore Exchange Ltd., whose stock market suffered a five-hour halt last week, said the issues were caused by a hard disk failure and an application that didn’t detect the fault.

The exchange has replaced the disk and submitted an interim report to the Monetary Authority of Singapore, Chief Executive Officer Loh Boon Chye told reporters on Tuesday. Investigations are ongoing and the bourse is working to determine the cause of the disk failure.

“We will increase the number of our business continuity planning scenarios which require industrywide participation for reconciliation and recovery,” Loh said. “If you look at exchanges globally, disruptions do occur.”

Thursday’s outage was the longest disruption, and at least the third malfunction, under Loh in his first year at Southeast Asia’s biggest bourse. The system generated duplicate trade confirmation messages and SGX failed to follow through on two pledges to reopen during the afternoon. The events frustrated traders, prompting Loh to apologize.

Falling Volume

The outage came as SGX, which has a monopoly on stock trading in the city, battles a decline in volume. About S$1.07 billion ($792 million) of shares changed hands on an average day in 2016, according to data compiled by Bloomberg. That’s a drop of 6.1 percent from a year earlier.

“SGX was absolutely right not to have restarted the market intraday until all member firms could reconcile their trades and risk exposure,” said TK Yap, head of institutional business at OCBC Securities Pte. “Otherwise it would have created an uneven playing field and made matters worse.”

The central bank said Friday it will review SGX’s findings before deciding on “appropriate supervisory actions.” SGX has the responsibility to ensure that its systems and recovery processes are robust, and the central bank said it takes a serious view of the market disruption. Thursday’s halt exceeded the regulator’s acceptable maximum unscheduled downtime for financial institutions of four hours in any 12-month period.

“We stepped in to assume trades that members could not,” Loh said. The exchange has liquidated those positions and the amount involved is very small, he said.

MAS in June 2015 barred SGX from raising fees after twin trading disruptions in the preceding months. Then-CEO Magnus Bocker apologized for the incidents and the exchange paid S$1 million into an education fund.

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, Michael Patterson

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