SINGAPORE - The Monetary Authority of Singapore (MAS) has reprimanded the Singapore Exchange (SGX) for lapses related to the market outages on 5 November and 3 December 2014 and directed the exchange to improve its recovery capabilities and processes.
There will be a moratorium on fee increases for the securities and derivatives markets with immediate effect until the improvements are completed, MAS said in a statement, which was accepted by the bourse on Wednesday.
SGX also said it accepted recommendations by its Board Committee of Inquiry to eliminate the root cause for the power outage and will invest S$20 million to improve and strengthen its technology infrastructure in their acceptance of full responsibility for the outage incident.
In addition, SGX will contribute S$1 million to the Investor Education Fund, which is used to fund educational programmes.
Trading on SGX was halted for three hours on Nov 5, 2014 following a technical glitch that caused the most severe disruption on the exchange in seven years. Another outage on December 3, 2014 delayed market opening to errors in reports generated by SGX's client accounting system. The errors were caused by technical changes performed during the weekend before the incident.
While MAS acknowledged that remedial actions have been taken to address causes of the power outages, it has directed SGX to strengthen its monitoring system capabilities to allow timely and accurate problem identification, strengthen its management and recovery procedures to improve crisis preparedness and improve its crisis communications processes to provide prompt information to all stakeholders.
MAS will monitor implementation of the remedial measures and satisfactorily verify them through an independent expert, the statement said, until which time SGX will no be allowed to increase fees for securities and derivatives markets.
MAS has directed SGX to improve its service recovery and how it implements technical changes in relation to the December incident.
"Financial institutions have the responsibility to ensure the resilience of their technological systems," MAS deputy managing director of financial supervision Mr Ong Chong Tee said. "They should effectively manage their technology risks and ensure prompt recovery when incidents arise so as to minimise service disruption to customers."