3-hour delay in SGX derivatives trade due to glitch

PHOTO: 3-hour delay in SGX derivatives trade due to glitch

SINGAPORE - A technical glitch caused the derivatives trading market of the Singapore Exchange (SGX) to open nearly three hours late Tuesday morning.

The market - which SGX says offers Asia's broadest range of derivatives, including contracts linked to markets in Japan, India and Taiwan - normally opens at 8am on weekdays.

On Tuesday, it opened at 10.45am instead, resulting in lost opportunities for traders to buy and sell derivative contracts such as futures and options.

At about 8.30am on Tuesday, the SGX said in a statement that its derivatives market was "experiencing technical issues" and that opening would be delayed.

Just short of 11am, the SGX issued another statement saying that the problem had been resolved, and that the market had opened for trading at 10.45am.

"We apologise for any inconvenience caused by the earlier technical issue," it said.

In the evening, the SGX released a third statement saying it had investigated the reason for the delayed opening, and found it was unrelated to market volumes or changes to the system.

The delay, it said, was caused by a system-monitoring process that did not function as expected, thus a routine maintenance activity that must be carried out before the derivatives market opens did not complete on time.

"We know that today's outage inconvenienced our customers and we apologise for this," said SGX chief operations and technology officer Tim Utama.

"Please be assured that we view such issues seriously and will take all the necessary steps to further improve our processes," he added.

Some traders lamented the loss of trading hours on Tuesday.

"We had missed opportunities in trading because of the disruption," said Mr Terence Koh, managing director of Genk Capital. He said this was especially so as Japanese stocks were experiencing high volatility. Large changes in stock prices provide more chances for traders to profit from derivatives contracts.

"There's the uncertainty that the system may go down again," Mr Koh told Bloomberg News.

The widely traded Nikkei 225 futures, a derivative on Japan's stock market, is the SGX's biggest futures contract by volume.

Bloomberg data said Nikkei 225 futures fell as much as 0.2 per cent in Osaka while trading was halted in Singapore. They later rebounded in both places.

This is not the first time glitches have hit the SGX's derivatives market. In February 2007, trading was halted for four hours due to "non-routine" log-in activities of some member firms.

The SGX said last week that derivatives trading for last month, including futures and options, grew 34 per cent from the same month in the previous year to reach 473,028 contracts.

Derivatives made up 28 per cent of SGX revenue for the three months to Dec 31 last year.

The SGX's share price gained five cents on Tuesday to $7.75.

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