Singapore Exchange draws central bank fire after latest lapse

Singapore Exchange draws central bank fire after latest lapse

SINGAPORE - Singapore Exchange Ltd (SGX) came under fire on Wednesday after stock trading was interrupted for a second time in a month, piling pressure on a bourse and CEO grappling with falling trading volume.

A software error led SGX to open the bourse three and a half hours late. The delay followed a Nov. 5 power failure that halted stocks and derivatives trading, prompting the Monetary Authority of Singapore (MAS) to brand the latest lapse "unacceptable".

The delay deals a fresh blow to the ambitions of Chief Executive Magnus Bocker to make the bourse one of Asia's largest through initiatives such as increased focus on derivatives.

Bocker, who led an unsuccessful $8 billion bid for ASX Ltd in 2010, has been battling low trading volumes since a penny-stock crash last year damped investor interest in SGX's small- and mid-cap market.

"I cannot speak for myself, but on the ground I assess that most remisiers want him (Bocker) to leave," said Jimmy Ho, President of the Society of Remisiers.

Bocker, whose contract expires in June, signalled he had no plans to leave because of the incident.

"I'm not giving up because of this," he told reporters. The decision as to whether he will renew his contract is between him and the board, he said.

MAS, in a statement, instructed Bocker and the SGX board to review processes and address any shortcomings leading to the delay. "MAS will not hesitate to take supervisory actions against SGX if necessary."

A software upgrade over the weekend caused a glitch in SGX's Client Accounting System used by nine securities brokers, SGX said. It delayed trading to enable member firms to reconcile client positions and rectify any errors in end-of-day processing for Dec. 1.

Bocker said though not all brokers use the affected system, SGX delayed trading to ensure fairness across the market.

Earlier in a statement, Bocker apologised for the inconvenience, saying he understood the market's "frustration" and that SGX was reviewing processes to prevent any recurrence.

"This should not have happened and we take full responsibility," he said.

SGX reported a 16 per cent fall in net profit in its first quarter when the average daily value of securities traded on the exchange fell 27 per cent.

Shares of SGX declined 0.6 per cent on Wednesday, in line with the FTSE Straits Times Index. The stock is down 0.4 per cent this year, versus a 4 per cent gain in the benchmark.

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