So important is the functioning of the stock exchange that the longest trading disruption seen yet at the Singapore Exchange (SGX) drew public flak and a sharp response from the central bank. Capital being the life blood of the economy, any interruption of its flow - which an exchange facilitates by providing ready market for securities - would be rightly deemed unacceptable by businessmen and investors alike. Major outages reflect poorly on the nation, especially when it prides itself on being a major financial centre. That's one reason why the Monetary Authority of Singapore said it took a "serious view over the closure". Another is SGX's disconcerting series of breakdowns over the past two years - there was a failure of critical systems in November and December 2014, and two more incidents followed last August and October, when its derivatives platform went on the blink. So, what is ailing SGX?
The answer often appears cloudy when technology is implicated. In the latest instance, a rogue disk supplied by tech giant HP had failed. A clearing confirmation messaging application also failed in not spotting this defect and automatically switching to SGX's backup secondary system. Thus, one error led to others, which ultimately saw the halt of trading for over five hours on July 14. Recovery was said to be delayed because of challenges posed by the orders and trade confirmation process, which itself should be reviewed.
But there was precious little public understanding of all this the day after, when an SGX official said obscurely a glitch was "discovered with a trigger to hardware". The paralysing effect of major failure might lead laymen to harbour doubts about even higher levels of dependency on technology that a "smart nation" will require, especially when technical causes of disruptions are nigh impossible for them to figure out.
In truth, while many bourses have experienced tech-related failures, major outages are relatively few. The greater worry is when catastrophic events shut down exchanges, as happened during wars, revolutions, invasions, civil unrest and financial crises. Also sinister are cyber attacks that aim to crash computer systems supporting large-scale financial activities. Nevertheless, an exchange should do all it can to avert any "internal technical issue", in the words of the New York Stock Exchange (NYSE) when it shut down for several hours a year ago. In the United States. however, this was not felt keenly as it has 11 exchanges and most NYSE stocks are traded on many of the others. There is less resilience when there is great dependence on a primary exchange. Hence, the critical need for bourses to shore up their technical defences. If confidence is shaken once too often, capital might take flight to competing exchanges. That is an outcome SGX cannot afford to countenance.