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Singapore securities market disruption down to chain of failures: SGX

Singapore Exchange’s (SGX) securities market experienced serious disruption on 14th July 2016, with trading ceasing at 1138 hours and the market staying closed for the rest of the day. SGX has now issued an after-action report about the incident.

SGX has reported that investigations have found that the disruption was caused by a disk failure and an application that did not detect the problem. The disruption was ‘prolonged due to challenges in the orders and trade reconciliation process’.

SGX states that:

“At 0938 hours, SGX detected Input/Output errors on a disk that runs the application to send out clearing confirmation messages to members. As the application did not detect the disk failure, which it should have, it did not automatically cutover to SGX’s backup secondary system. SGX initiated a manual cutover from the primary to secondary systems at 1012 hours.

“As a result of [the] disk failure, some clearing confirmation messages were not generated. Following the cutover, the application attempted to resend all missed messages, which resulted in some messages being duplicated.

“At this point, trading ceased at 1138 hours, and from 1151 hours members could reconcile and manage their orders including those which were traded. Trading was orderly throughout the time the market was open.

“While there was a problem with the clearing confirmation messaging application, there was no problem with the trade confirmation messaging application, which had continued to work as normal. To reconcile their orders and trades, members [could] rely either on trade confirmation messages or clearing confirmation messages. Those using the latter in this case experienced problems with reconciling orders and trades.”

SGX says that it is taking the following steps to ensure that such a situation does not occur again:

  • It is working with its vendor to review the application which sends out clearing confirmation messages and will implement the necessary changes to ensure detection by the application of specific hardware problems.
  • It will improve its data generation process and fine tune the data files to help its members with their reconciliation processes.
  • It will work with members to review their order and trade reconciliation process, to improve overall recovery and market resumption, in the event of a similar recurrence.
  • It will increase the number of its business continuity planning scenarios which require industry-wide participation for reconciliation and recovery.

Source: SGX

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