Practice Note 8.6 — Application of the Forced Order Range
|Issue Date||Cross Reference||Enquiries|
|Added on 4 July 2011, amended on 25 October 2012, 26 August 2013, 19 May 2014, 7 July 2015, 23 December 2015 and 19 May 2016.||Rule 8.6||
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1.1 This Practice Note explains the application of the Forced Order Range as an error trade prevention measure.
1.2 Unless otherwise determined by SGX-ST, the Forced Order Range of the following products shall be as follows:
|S/N||Product||Price Range (S$)||Minimum Bid Size (S$)||Forced Order Range|
|1||Stocks (including preference shares), Real Estate Investment Trusts (REITS), business trusts, warrants and any other class of securities or Futures Contracts not specified in this Rule 8.3.3||Below 0.20||0.001||+/- 20 bids|
|0.20 – 1.995||0.005|
|2.00 and above||0.01|
|2||Exchange traded funds and debentures||All||0.01 or 0.001 as determined by SGX-ST||+/- 30 bids|
|3||Bonds and loan stocks quoted in the $1 price convention||All||0.001|
|4||Bonds and loan stocks quoted in the $100 price convention (including SGS Bonds)||All||0.001||+/- 1,000 bids|
1.3 Subject to paragraph 1.4 of this Practice Note 8.6, SGX-ST provides a pre-execution mechanism, known as the Forced Key function, to mitigate the occurrence of error trades resulting from errors in the entry of order prices. Orders entered at prices outside the Forced Order Range must be confirmed by using the Forced Key function, before the orders may be submitted.
1.3A The Forced Key function will not be applicable prior to the first trade on the first day of trading of any newly-listed instrument.
1.3B SGX-ST may, at its discretion apply the Forced Key function in particular cases notwithstanding paragraph 1.3A. If SGX-ST uses its discretion to apply the Forced Key function to any such case SGX-ST will give prior notice to Members.
1.4 The Forced Key function is intended to complement, and not replace, Members' responsibility to adopt adequate and appropriate measures and practices to safeguard against the execution of error trades.
2. Risk Management Controls
2.1 In order to mitigate the occurrence of error trades resulting from errors in the entry of order prices, Trading Members should:
(a) ensure that the Forced Key alert is available;
(b) encourage Trading Representatives to exercise judgment when accepting an instruction from a customer to execute an order priced outside the Forced Order Range; and
(c) ensure that procedures are in place to determine if there are legitimate commercial reasons for orders priced outside the Forced Order Range.