LAST_UPDATETue, 19 Jun 2018 12am

MAS Directs SGX To Enhance Recovery Processes Following Trading Disruption Last Year

Photo: Today OnlinePhoto: Today Online

SINGAPORE -- The Monetary Authority of Singapore (MAS) has directed the Singapore Exchange (SGX) to implement measures to enhance its recovery processes and operational resilience.

This is following supervisory investigation into the trading disruption to the securities market on July 14, 2016.

These measures included recommendations by the Industry Working Group (IWG), comprising SGX and industry stakeholders.

In a statement today, MAS' Deputy Managing Director, Financial Supervision, MAS, Ong Chong Tee, said the authority took 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.

"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," Ong said.

SGX will contribute S$1.5 million (S$1 = RM3.14) to co-fund the costs that may be incurred by brokerage firms to implement the IWG measures.

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.

MAS said SGX has taken steps since the incident to address the hardware and software errors which led to the trading disruption.

SGX had also, in consultation with MAS, formed the IWG to study and make recommendations on SGX's and industry participants' processes to enhance the operational resiliency of the securities market.

The IWG comprised representatives from SGX, local and international members of SGX, the investment community, independent experts and a software vendor, and was assisted by an external consultant.

Its report to MAS recommends improvements in the areas of restoration of corrupt data; market recovery procedures; market closure and resumption timelines; trade assumption; incident communication; and business continuity scenarios.

MAS has accepted the IWG's recommendations and directed SGX to complete the implementation of these recommendations within 24 months.

The implementation of these recommendations will involve changes to the systems and processes of both SGX and the brokerage firms.

Meanwhile, following the Nov 5, and Dec 3, 2014 trading outages, MAS required SGX to make improvements to address the lapses related to those outages.