Disk failure caused Thursday's trading outage: SGX

The Singapore Exchange at 2 Shenton Way.
The Singapore Exchange at 2 Shenton Way. ST PHOTO: SEAH KWANG PENG

SINGAPORE - The Singapore Exchange disclosed more details on Tuesday (July 19) of the technical malfunction that caused the longest trading outage in its history last week.

SGX halted trading for more than five hours last Thursday, after the discovery of a fault that generated duplicate trade confirmation messages.

In a conference call on Friday, SGX CEO Loh Boon Chye had said a hardware failure caused the longest trading disruption in the exchange's history, without giving more details.

At Tuesday's press briefing, SGX said Thursday's disruption was caused by a disk failure and a software application that did not detect the problem. The disruption was prolonged due to challenges in the orders and trade confirmation process.

 

SGX said that at 9:38am on that day, it detected 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 10.12am.

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

At this point, trading ceased at 11.38am, and from 11.51am members could reconcile and manage their orders including those which were traded, said SGX. Trading was orderly throughout the time the market was open, it said.

SGX said that 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 experienced problems with reconciling orders and trades, said SGX.

SGX said the hardware in question was supplied by HP, while the software application was from Nasdaq.

It said the faulty disk was replaced on Thursday and complete health checks were done.

SGX also said the recovery took longer than expected because while it 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.

On remedial and follow-up actions, Mr Loh said SGX is working with the vendor to review the application that sends out clearing confirmation messages and will implement the necessary changes to ensure detection by application of specific hardware problems.

SGX will also increase number of business continuity planning scenarios and will work with members to review the order and trade reconciliation process to improve recovery and market resumption.

Thursday's outage was SGX's fourth major market disruption in two years. Other stock exchanges like have suffered long outages, they have been infrequent.

Analysts have said the latest trading disruption could deal a further blow to SGX's reputation. South-east Asia's largest bourse is battling sluggish trading volumes, a fall in new listings and a string of privatisation deals that have eroded its market capitalisation.