OREANDA-NEWS. SGX Provides Further Details on Market Disruption

1. Singapore Exchange’s (SGX) securities market experienced a market disruption on Thursday, 14 July 2016, when the exchange ceased trading at 1138 hours, and remained closed for the rest of the day.

2. Investigations found that Thursday’s event was caused by a disk failure and an application that did not detect the problem. The disruption was prolonged due to challenges in the orders and trade reconciliation process.

Cause and description of disruption

3. At 0938 hours, SGX detected Input/Output errors on a disk that runs the application to send out clearing confirmation messages to members. As the application did not detect the disk failure, which it should have, it did not automatically cutover to SGX’s backup secondary system. SGX initiated a manual cutover from the primary to secondary systems at 1012 hours.

4. As a result of disk failure, some clearing confirmation messages were not generated. Following the cutover, the application attempted to resend all missed messages, which resulted in some messages being duplicated.

5. At this point, trading ceased at 1138 hours, and from 1151 hours members could reconcile and manage their orders including those which were traded. Trading was orderly throughout the time the market was open.

6. While there was a problem with the clearing confirmation messaging application, there was no problem with the trade confirmation messaging application, which had continued to work as normal. To reconcile their orders and trades, members can rely either on trade confirmation messages or clearing confirmation messages. Those using the latter in this case experienced problems with reconciling orders and trades.

Reconciliation process challenges

7. Order and trade reconciliation required SGX and its members to match their trade or clearing confirmation data files.

a. While SGX provided members with a complete set of data detailing all trades done prior to the adjust phase, specific, one-off data files on missing and duplicated clearing confirmation messages, for each member had to be generated. This was because members have different trade and order management systems and processes. These one-off files had to be newly generated by SGX.

b. SGX proceeded to work with each individual member to reconcile all trade and orders status to ensure that records in their respective trade and order management systems were accurate. The entire process took longer than expected, as members use different systems, and either the trade confirmations or clearing confirmation messages, or both.