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Singapore Exchange hit by second disruption this year

The Singapore Exchange was hit by its second disruption this year with the start of trading in some derivatives contracts delayed by over two hours on Thursday morning.

It is the latest in a series of technical failures that have become an increasing source of embarrassment in one of Asia’s main financial centres. Most recently, SGX in July halted trading on its securities market for five hours because of a glitch that caused duplicate trade confirmation messages.

Trading in Nikkei 225 index futures, one of the most popular contracts on SGX, began just after 10am on Thursday — more than two hours later than normal. The opening for a number of other contracts for India Nifty 50 futures and iron ore was also delayed.

SGX did not give a reason for the delay but said in a statement at 10:23am that all trading had been normalised.

Andrew Sullivan, sales trading managing director at Haitong International Securities in Hong Kong, said: “Singapore had an outage a while back — markets never like this sort of thing. Ok, this is a small thing, but it will probably have far more of an impact.”

Jason Ambrose of Vanda Research, said: “It’s the first hour that’s most important. When risk is being driven by US policy, and you get to the end of the US day, you are trying to hedge some risk, or put some risk on in Asia. They seem to have contained this quickly, but when it’s more often than once a year, you do lose credibility.”

SGX set up a working group in September to look at ways to improve operational resilience following the July outage. That disruption was caused by a combined hardware and software failure; after a hard disk failed, software did not detect the fault and switch to a secondary system as it should have done.

In August last year, trading on the Singapore derivatives market was temporarily suspended. The exchange was also disrupted twice in 2014, prompting a reprimand from the Monetary Authority of Singapore, the regulator. 

The MAS imposed a moratorium on SGX increasing customer fee rises until technology improvements were completed.

The Nikkei 225 futures contract on the SGX was up 0.9 per cent on volume of 46,039 in mid-morning trading on Thursday, compared to volume of 133,380 on Wednesday. The underlying index was up 0.8 per cent.

Shares in SGX were up 0.4 per cent, while the Straits Times Index was up 0.6 per cent.

Last month the exchange operator said total securities market turnover in October fell 15 per cent from a year earlier to S$19.6bn (US$13.84bn). Total derivatives volume was 11.5m, down 14 per cent month-on-month but up 2 per cent from a year ago.

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