Chapter 11 Cancellation of Contracts and Trades

11.1 Cancellation of Contracts

11.1.1

A contract made on SGX-ST can only be cancelled in accordance with this Rule 11. A contract will not be cancelled merely because of the occurrence of one or more of the following circumstances:

(a) delivery fails;

(b) payment is not made on delivery; or

(c) the share registrar refuses to register a transfer.

Added on 3 June 2019 3 June 2019.

11.1.2

SGX-ST may cancel a contract in any of the following circumstances:

(a) if the contract arises from an Error Trade (as defined in Rule 11.2.1) and:

(i) the Trading Members to the contract agree to the cancellation; or

(ii) SGX-ST is satisfied that the contract should be cancelled;

(b) the contract arises from a Trade at Close and subsequent to the trade, SGX-ST:

(i) invalidates the Closing Auction Price on which the trade is based; or

(ii) determines an alternate closing price for the security;

(c) if there is prima facie evidence of fraud or wilful misrepresentation in relation to the contract; or

(d) in SGX-ST's opinion, it is desirable to cancel the contract to protect the financial integrity, reputation or interests of the markets established or operated by SGX-ST.

Added on 3 June 2019 3 June 2019 and 3 June 2019 3 June 2019.

11.1.3

SGX-ST may impose any conditions it thinks appropriate for or in relation to the cancellation of a contract.

Added on 3 June 2019 3 June 2019.

11.1.4

SGX-ST may reprimand or impose a fine not exceeding S$2,000 on a Trading Representative and/or the Trading Member who caused a contract to be cancelled under Rule 11.1.2.

Added on 3 June 2019 3 June 2019.

11.1.5

An action under this Rule is in addition to other actions which SGX-ST is entitled to take against the Trading Representative or Trading Member.

Added on 3 June 2019 3 June 2019.

11.2.1

An "Error Trade" refers to a trade that is executed on the Trading System and that results from:

(a) an erroneous entry in relation to the price and/or the volume of an order; and/or

(b) an erroneous entry in relation to the name of the securities or futures contracts.

Added on 3 June 2019 3 June 2019.

11.3 Procedures for Cancellation

11.3.1

When an Error Trade occurs:

(a) the Trading Member that caused the Error Trade must:

(i) inform SGX-ST of the Error Trade by telephone within 30 minutes from the time the Error Trade took place; and

(ii) without delay contact the counterparty Trading Member and seek its agreement to cancel the Error Trade; and

(b) both Trading Members must take all necessary steps to minimise any likely market impact caused by the Error Trade.

Added on 3 June 2019 3 June 2019.

11.3.2

In the event that the Trading Members mutually agree to cancel an Error Trade:

(a) the Trading Member that caused the Error Trade must inform SGX-ST of the agreement without delay; and

(b) both Trading Members must submit the necessary trade cancellation request forms to SGX-ST.

Added on 3 June 2019 3 June 2019.

In the event that the Trading Members cannot mutually agree to cancel an Error Trade, the Trading Member that caused the Error Trade may, provided that the procedures in Rule 11.3.1 have been complied with, request SGX-ST to review the Error Trade. Save as provided in Rules 11.3.6 and 11.4.1, SGX-ST will not review an Error Trade if the procedures in Rule 11.3.1 have not been complied with.

Added on 3 June 2019 3 June 2019.

11.3.4

In making the request to SGX-ST to review an Error Trade, the following procedures shall apply:

(a) the matter must be referred to SGX-ST within 60 minutes from the time the Error Trade occurred or before 18:00 hours on the day that the Error Trade occurred, whichever is earlier; and

(b) the Trading Member that caused the Error Trade must notify the counterparty Trading Member that it has referred the matter to SGX-ST.

Added on 3 June 2019 3 June 2019.

11.3.5

The requesting Trading Member must pay a trade review fee of S$1,000 for each referral accepted for review by SGX-ST, regardless of the outcome of the review.

Added on 3 June 2019 3 June 2019.

11.3.6

SGX-ST may in its discretion allow an extension of the timelines set out in Rules 11.3.1 and 11.3.4, taking into account:

(a) the total number of Error Trades referred to SGX-ST;

(b) the complexity of the circumstances surrounding the Error Trade; or

(c) any other relevant factors.

Refer to Practice Note 11.3.

Added on 3 June 2019 3 June 2019.

11.4 Error Trade Cancellations

11.4.1

Notwithstanding Rules 11.3 and 11.5, SGX-ST reserves the right to review an Error Trade if SGX-ST deems it necessary for the proper maintenance of a fair and orderly market.

Added on 3 June 2019 3 June 2019.

11.4.2

SGX-ST may consider any relevant information, including but not limited to the following when deciding whether to cancel an Error Trade:

(a) the difference between the price at which the trade was done and the preceding traded price of the security or futures contract;

(b) the market liquidity in the security or futures contract at the time the trade occurred;

(c) where the trade involves a futures contract, the trading behaviour of the underlying;

(d) the monetary loss involved if the trade is or is not cancelled;

(e) the difference between the time the erroneous order was entered and the time it was matched;

(f) the number of counterparty customers involved;

(g) whether the Force Key was used or any other error prevention alert was triggered when the erroneous order was entered into the Trading System;

(h) the impact on the settlement process;

(i) in the case of bonds, the rating, interest rate, coupon rate, maturity date and yield curve; and

(j) the reason(s) given for the error.

Refer to Regulatory Notice 11.4.2 (d).

Refer to Regulatory Notice 11.4.2 (g).

Added on 3 June 2019 3 June 2019.

11.4.3

The following procedures shall apply when SGX-ST is satisfied that an Error Trade has occurred:

(a) inform the market of the Error Trade;

(b) inform the market of the outcome of SGX-ST's review in relation to the Error Trade (i.e. whether the Error Trade remains valid or has been cancelled); and

(c) notify both Trading Members of the outcome of SGX-ST's decision under Rule 11.4.1 in writing.

Added on 3 June 2019 3 June 2019.

11.4.4

SGX-ST will not consider any request to review its decision following the notification under Rule 11.4.3(b).

Added on 3 June 2019 3 June 2019.

11.5 No-Cancellation Range

11.5.1

A no-cancellation range will be applied to all securities and futures contracts, excluding bonds, as set out in this Rule 11.5.

Added on 3 June 2019 3 June 2019.

11.5.2

Subject to Rule 11.4.1, SGX-ST will not review an Error Trade referred to it by a Trading Member if the Error Trade falls at or within the upper and lower limits of the applicable no-cancellation range.

Added on 3 June 2019 3 June 2019.

11.5.3

Notwithstanding Rule 11.5.1, SGX-ST reserves the right to apply or remove a no-cancellation range.

Added on 3 June 2019 3 June 2019.

11.5.4

For structured warrants:

(a) The no-cancellation range will be the wider of the following:

(i) a lower limit of 20 minimum bid sizes less than the Reference Price, and an upper limit of 20 minimum bid sizes higher than the Reference Price; or

(ii) a lower limit of 75% of the Reference Price, and an upper limit of 125% of the Reference Price.

(b) The Reference Price of the no-cancellation range for structured warrants will be determined as follows:

(i) the average of the last quoted bid price and the last quoted offer price for the structured warrant immediately preceding the Error Trade; or

(ii) the average of the market prices as quoted by at least three Designated Market-Makers of structured warrants. The Designated Market-Makers will be selected randomly by SGX-ST, but will not include any Designated Market-Maker who is involved in the Error Trade that is under review.

(c) Where SGX-ST is of the view that no appropriate or reliable Reference Price is available, SGX-ST will not establish a no-cancellation range for that Error Trade.

Added on 3 June 2019 3 June 2019.

11.5.5

For all other securities or futures contracts, excluding bonds:

(a) The no-cancellation range will be determined as the wider of the following:

(i) a lower limit of 20 minimum bid sizes less than the Reference Price, and an upper limit of 20 minimum bid sizes higher than the Reference Price; or

(ii) a lower limit of 95% of the Reference Price, and an upper limit of 105% of the Reference Price.

(b) Subject to Rule 11.5.5(c), the Reference Price of the no-cancellation range for the security or futures contract will be the price of the last good trade.

(c) SGX-ST may, in its discretion, use an alternative price as the Reference Price for the no-cancellation range if:

(i) the price of the last good trade is not available; or

(ii) SGX-ST deems the price of the last good trade to be unreliable or inappropriate as a Reference Price.

(d) Where SGX-ST is of the view that no appropriate or reliable Reference Price is available, SGX-ST will not establish a no-cancellation range for that Error Trade.

Refer to Practice Note 11.5.5(c).

Added on 3 June 2019 3 June 2019.