Market participants unhappy over disruption

SINGAPORE — Investors, brokers and companies yesterday hit out at the Singapore Exchange (SGX) for the latest major trading disruption, saying the three glitches at the exchange this year had dented the Republic’s reputation as a major financial hub.

In a strongly-worded media statement, the Small and Middle Capitalisation Companies Association (SMCCA), launched less than two months ago, said an “unreliable stock exchange can be potentially damaging to listed companies”. As these firms make corporate announcements daily, they depend on the bourse to help ensure the market functions smoothly.

“Trading disruptions have been totally unheard of in the past five to 10 years. It is thus important to clearly establish whether these are two highly unfortunate and highly coincidental incidents or the first signs of something with deeper implications,” said SMCCA president Tan Choon Wee.

Yesterday’s disruption, caused by a software defect that delayed opening of the securities trading session to 12.30pm, came within a month after a power-supply problem shuttered the securities and derivatives markets by several hours. The spate of lapses has prompted the SMCCA to call for an independent inquiry to investigate them thoroughly.

“This is the best way to establish the root of the operational failures and to ensure we do not get further trading disruptions. It is critical to Singapore’s reputation as a financial hub that these two incidents remain isolated one-offs,” Mr Tan said.

Echoing the sentiment, Mr David Gerald, president and chief executive of Securities Investors Association Singapore, said the SGX must take immediate firm action to restore market confidence, especially after it had invested heavily in its trading system.

“It is not good for the confidence in the market as it appears to be happening once too many times. Investors are in a quandary. The SGX needs to address this problem urgently to avoid a recurrence, especially in this period of low market volume,” he said.

Remisiers and brokers TODAY spoke to expressed unhappiness about the income losses that they had incurred because of the shorter trading hours yesterday. This is partly because the early trading hours tend to see more activity, especially for investors who make international trades.

Mr Jimmy Ho, president of the Society of Remisiers, said: “Some people are free to trade in the mornings but not in the afternoons. They might also miss out on international opportunities. Damage would be bad enough in terms of trading losses.”

A broker, who would be known only as Timothy, said he lost “quite a bit of business” yesterday as he usually does between 50 and 100 trades in the early trading session. A retail investor, who gave his name as Gary, told TODAY the disruption had hampered investors who were looking to profit over the course of a full trading day.

“I was not affected by the problem ... but with only half a day to trade, it’s more difficult to make a big move because, usually, people take their positions early in the morning, wait for things to settle and then exit later in the day. When you have fewer hours, you can’t do that, that’s why there wasn’t much liquidity in the market (yesterday),” he said.