The Singapore Exchange (SGX) has been given 24 months to complete the implementation of measures aimed at enhancing its operations in the wake of a major trading disruption in July last year.
These include moves related to restoring corrupt data, incident communication, and business continuity testing and support.
Some of the measures will require changes to the systems and processes of brokerage firms too.
The SGX will contribute $1.5 million to co-fund the costs that may be incurred by brokerages to implement these measures, the Monetary Authority of Singapore (MAS) said yesterday.
Society of Remisiers president Jimmy Ho said the society had proposed standardised e-mail communications from the SGX to the brokerages, and from the brokerages to their remisiers, in the event of trading disruptions.
Nov 5, 2014: Power supply issues cause a three-hour outage on the SGX, affecting both the securities and derivatives markets.
Dec 3, 2014: The opening of the securities market is delayed by over three hours, caused by a software update that triggered a glitch. The MAS calls the lapse, the second in a month, "unacceptable".
June 23, 2015: The MAS imposes a moratorium on fee increases for SGX's securities and derivatives markets, until the SGX makes improvements to address the lapses related to the 2014 outages.
July 14, 2016: The SGX has its longest-ever securities market disruption, with trading halted for over five hours. It began with hardware issues, but was complicated by challenges in the orders and trade reconciliation process.
Sept 6, 2016: The SGX forms an Industry Working Group to make recommendations to lift operational resilience in the event of trading disruptions.
March 20, 2017: The moratorium on fee increases is lifted as the SGX has implemented measures to address lapses related to the 2014 outages.
The MAS tells the SGX it has 24 months to enhance its recovery processes in the event of a major disruption like the one in July last year.
"The communications should identify the problem and state what SGX intends to do, so it doesn't become a guessing game," he said.
Mr Ong Chong Tee, deputy managing director of financial supervision at the MAS, said in a statement: "Both SGX and brokerage firms have a shared responsibility to establish clear processes for timely recovery of our securities market in the event of an incident."
The July 14 incident was the longest securities market disruption on the bourse, with trading halted for more than five hours.
The MAS said that while the SGX has met its primary obligation to maintain fair, orderly and transparent markets, it did not on that day restore the proper functioning of its critical system within four hours, as required.
The MAS noted, however, that the SGX has taken steps to address the hardware and software errors that led to the trading disruption.
It has also, in consultation with MAS, formed an industry working group (IWG) to make recommendations on how the processes of the bourse operator and brokerages could be enhanced. The MAS has accepted the IWG's recommendations and directed the SGX to complete their implementation within 24 months. The SGX said yesterday that it has implemented three out of six IWG recommendations.
It has established a master record as the authoritative source of data in the event of complex malfunctions; provided more clarity on the timing and principles for market closure and resumption during a market-wide incident; and established a clear protocol for trade assumption.
Corporate lawyer Robson Lee said he was heartened by the SGX's swift response.
"While no controls can eliminate market disruptions, the operational readiness of the exchange to effect systems recovery from disruptions is cardinal to Singapore's reputation as a financial centre."
The MAS has also lifted a moratorium on fee increases which it had imposed on the SGX in 2015, after two outages in late 2014. The MAS had told the SGX to implement measures to address the lapses, which the SGX has completed.