The Singapore Exchange (SGX) will push out more data on market misconduct to help brokerages beef up efforts to detect and stop market rigging.
To that end, it is launching a trade surveillance handbook which illustrates malpractices such as spoofing and "marking the close".
These are examples of trading behaviour that an errant trader may employ to create a false or misleading appearance of active trading in an instrument - and that could lead to the creation of a false market.
SGX chief regulatory officer Tan Boon Gin said: "Trading misconduct must be curtailed as early as possible to minimise market impact and maintain public confidence. Trade-with-caution alerts is one example of this approach.
"Now, the trade surveillance handbook and members surveillance dashboard will enable member firms to join forces with SGX as gatekeepers to take the fight to detect and stop market misconduct even further upstream."
The handbook will provide a set of guidelines that brokerages can incorporate into their surveillance programmes to beef up their risk management and internal controls. For instance, a brokerage could institute controls such as automated pre-trade checks targeted at reducing and eliminating the occurrence of trading misconduct.
The malpractices include spoofing, which occurs when an errant trader submits a genuine order on one side of the order book, and then submits large fictitious orders on the other side. Upon execution of the genuine order, the trader then rapidly cancels the fictitious orders.
Marking the close is a form of market manipulation involving the purchase or sale of an instrument near or at market close, with the aim of artificially fixing the closing price.
Another measure to detect market misconduct is what SGX calls the brokerages' surveillance dashboard. It contains, in the form of a report, information on activities that can be related to market misconduct. The data includes the number of alerts triggered in SGX's surveillance system by the brokerage over potential malpractices.
Each dashboard details the date and time the alerts are triggered, the security counter or futures contract that triggered the alert, and the code of the trader involved.
The first dashboard will be released to brokerages this week, and will cover alerts generated from April to August. Subsequent dashboards will be released on a quarterly basis from January next year.
Securities Association of Singapore chairman Lim Kok Ann noted that investors will only participate in a market which has a level playing field, and is secure and efficient.
"Our members are, therefore, supportive of this collaborative approach towards improving the quality of the Singapore marketplace."