Practice Note — Direct Market Access And Sponsored Access
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012. | Definitions and Interpretation | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note provides further guidance on the definitions of Direct Market Access and Sponsored Access in the Definitions and Interpretations section of the Rules.
2. Direct Market Access
2.1 DMA may take place in the following manner:— 
(a) where the Trading Member permits its customer to use its member ID to transmit orders for execution directly to SGX-ST without using the Trading Member's infrastructure. This is known as Sponsored Access.
(b) where the Trading Member permits its customer to transmit orders electronically to the Trading Member's infrastructure (i.e., system architecture, which may include technical systems and/or connecting systems), where the order is in turn automatically transmitted for execution to a market under the Trading Member's member ID.
Added on 18 September 201218 September 2012.
Practice Note 4.6.7A(1)(b) — Pre-Execution Checks
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012 and amended on 15 March 201315 March 2013 and 1 July 20161 July 2016. | Rule 4.6.7A(1)(b) | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note explains the parameters and functions which pre-execution checks may contain as contemplated in Rule 4.6.7A(1)(b).
2. Pre-Execution Checks
2.1 Rule 4.6.7A(1)(b) requires Trading Members to ensure that automated pre-execution risk management control checks are conducted on all orders, including credit control checks on all customer orders. The purpose of this is to prevent overtrading. The parameters of such pre-execution checks and filters may include but are not limited to:—
(a) dollar limit to control the gross buy and sell value and/or net buy/sell value. This limit may be applied to an individual customer, a Trading Representative, a group of related accounts or a proprietary account carried on the books of the Trading Member;
(b) security limit to control the dollar/quantity exposure to each security. This limit may be used to control concentration risk for each customer and for the Trading Member's accounts as a whole on a per-security basis;
(c) dollar/quantity limit and price limit for each order. This allows for the detection of errors in inputting orders. For example, if a customer or Trading Representative were to enter an unusually large sized order or an order at a price that is far from the prevailing price, they could be alerted for confirmation of the order before it is accepted by the system; and
(d) controls to restrict customers to selected markets, order types and securities.
2.2 By way of illustration, pre-execution risk management control functions may include the following:—
(a) the ability to adjust credit or quantity limits in real time during a trading session;
(b) the ability to set permission levels (e.g. access to selected products/ instruments) and revoke the access of a Trading Representative or customer on a real time basis; and
(c) the ability to intercept orders that exceed credit or trading limits on a real-time basis and trigger error-prevention alerts.
2.3 Trading Members who authorise Sponsored Access will be able to meet the requirement in Rule 4.6.7A(1)(b) by being able to directly set and control pre-determined automated limits in the Sponsored Access customer's system, having automated alerts whenever such limits are altered, and by conducting regular post-execution reviews of trades. Trading Members should assess and continue to ensure that the pre-execution risk management control checks are robust on an ongoing basis.
2.4 Where a Trading Member has allowed its Clearing Member to directly set and control pre-determined automated limits in the Trading Member's system, the Trading Member should have the appropriate internal controls to prevent unauthorised modification of the limits set by the Clearing Member.
Added on 18 September 201218 September 2012 and amended on 15 March 201315 March 2013 and 1 July 20161 July 2016.
Practice Note 4.6.7A(1)(c) — Error Prevention
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012 and amended on 24 February 201424 February 2014. | Rule 4.6.7A(1)(c) | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note explains the types of error-prevention alerts contemplated in Rule 4.6.7A(1)(c).
2. Types of Error-Prevention Alerts
2.1 The types of error-prevention alerts to be made available may include but are not limited to the following:—
(a) maximum quantity per order — to alert Trading Representatives and customers of possible erroneous entries in relation to quantity; and
(b) price alerts — to alert Trading Representatives and customers of possible erroneous entries in relation to price.
2.2 Price alerts may include but are not limited to price range checks to alert Trading Representatives and customers when the new order entry price has exceeded:—
(a) a certain percentage; or
(b) a certain number of ticks,
as compared to the most recent of the last traded price, the previous settlement price, the closing price or the opening price, as the case may be.
as compared to the most recent of the last traded price, the previous settlement price, the closing price or the opening price, as the case may be.
Added on 18 September 201218 September 2012 and amended on 24 February 201424 February 2014.
Practice Note 4.6.7A(2) — Firm-Level Monitoring of Capital and Financial Requirements and Prudential Limits
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012. | Rule 4.6.7A(2) | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note explains the requirement for monitoring potential breaches of capital and financial requirements and prudential limits on exposures to a single customer and a single security set out in Rule 4.6.7A(2).
2. Firm-Level Monitoring of Capital Requirements and Prudential Limits
2.1 In an electronic trading environment where orders are processed and routed at speed, Trading Members should use appropriate measures to monitor if the firm is at risk of breaching its capital or financial requirements or any prudential limits, for example:—
(a) setting automated filters on firm-wide aggregated exposures;
(b) having processes to generate warnings; or
(c) having processes to route large value orders for review.
Added on 18 September 201218 September 2012 and amended on 15 March 201315 March 2013.
Practice Note 4.6.21 — Business Continuity Requirements
| Issue Date | Cross Reference | Enquiries |
| Amended on 22 January 200922 January 2009 and 19 May 201419 May 2014 | Rule 4.6.21 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 Rule 4.6.21 requires Members to:
(i) maintain adequate business continuity arrangements;
(ii) document business continuity arrangements in a business continuity plan;
(iii) test and review business continuity plans regularly; and
(iv) appoint emergency contact persons.
1.2 The objective is to ensure that Members have the ability to:
(i) react swiftly to emergency situations; and
(ii) maintain critical functions and fulfill obligations to customers and counterparties in the event of major operational disruptions.
2. Business Continuity Plan
2.1 Critical Elements of a Business Continuity Plan
2.1.1 Rule 4.6.21(1) requires Members to maintain adequate business continuity arrangements, and document such arrangements in a business continuity plan. As a guide, a Member's business continuity plan should document the following elements:
(i) Risk assessment: This includes a comprehensive assessment of business continuity risks (including financial and operational risks) and threat scenarios which may severely disrupt a Member's operations. Such scenarios may include prolonged power outages, IT system software or hardware failures, loss of voice or data communication links, acts of terrorism, and outbreak of infectious diseases;
(ii) Business impact analysis: This is an evaluation of the impact of the risks and threat scenarios identified in (i) above. The business impact analysis should identify critical business functions (including support operations and related information technology systems) and potential losses (monetary and non-monetary) to enable the Member to determine recovery strategies/priorities and recovery time objectives;
(iii) Work area recovery: This refers to continuity arrangements for a Member's critical functional capabilities in the event that the Member's primary office becomes inaccessible, for example, availability of a disaster recovery site ready for activation within a reasonable period of time;
(iv) Crisis communications: This refers to a communications plan for the Member to liaise with its internal and external stakeholders such as employees, customers and regulatory authorities during a crisis;
(v) Roles and responsibilities: This refers to the identification of a Member's key personnel and management staff, their roles and responsibilities, and reporting lines. Alternates should be identified to cover the responsibilities of absent key personnel.
(vi) Backup for critical functions*, information technology systems and data;
* Critical functions refer to business functions whose failure or disruption may incapacitate the firm.
* Critical functions refer to business functions whose failure or disruption may incapacitate the firm.
(vii) Key service providers^: This refers to assessing a Member's dependencies on key service providers in recovery strategies and recovery time objectives, and taking steps to ensure that key service providers are capable of supporting the Member's business, even in disruptions;
^ Key service providers refer to third-parties who are performing functions that are not normally carried out by Member firms internally, but are critical to Member firms' ability to carry on business operations. For example, IT system hardware/software vendors.
^ Key service providers refer to third-parties who are performing functions that are not normally carried out by Member firms internally, but are critical to Member firms' ability to carry on business operations. For example, IT system hardware/software vendors.
(viii) Outsourcing service providers#: This refers to assessing whether the service provider has established satisfactory Business Continuity Plans commensurate with the nature, scope and complexity of the outsourced services; and
# Outsourcing service providers refer to third parties who are performing functions that would normally be performed by Members firms internally. For example, Operations and Technology.
# Outsourcing service providers refer to third parties who are performing functions that would normally be performed by Members firms internally. For example, Operations and Technology.
(ix) Any other elements that the Member deems necessary to be included in its business continuity plan or which SGX-ST may prescribe from time to time.
2.2 Emergency Response During Crisis
2.2.1 A Member should establish and maintain a crisis management plan as part of its business continuity plan. The crisis management plan should include (but not be limited to):
(i) Emergency response procedures;
(ii) Roles and responsibilities of the crisis management team;
(iii) Command and control structures; and
(iv) Salvage and restoration procedures.
2.2.2 SGX-ST may declare a wide-area crisis in the event of a major and widespread incident. When such declaration is made, SGX-ST may require a Member to submit status reports to SGX-ST. A wide-area crisis may include any incident where the operations of a large number of market participants are disrupted simultaneously.
2.3 Regular Review, Testing and Training
2.3.1 Rule 4.6.21(4) requires a Member to review and test its business continuity plan regularly. Members should do so at least once a year to ensure that their business continuity plans remain relevant.
2.3.2 Where there are material changes to a Member's business activities and operations, the Member should update its business continuity plan accordingly. Regular training should be conducted for staff to be updated and aware of any relevant changes to the Member's business continuity arrangements. As a principle, training should be conducted when:
(i) changes have been made to the Member firm's BCP; and
(ii) new staff are recruited.
Member firms should also conduct refresher courses for existing staff where appropriate.
2.4 Application to a General Trading Member that holds a licence specified in Rule 2.4.1(b)
2.4.1 The features of a business continuity plan set out in paragraphs 2.1, 2.2 and 2.3 may not be applicable to a General Trading Member that holds a licence specified in specified in Rule 4.1.1(1)(b). The guidance for such Trading Members is set out in Practice Note 4.6.21; 12.1.1; 12.3.6; 12.6.4; 12.7.2; 12.10A.2; 12.19.
3. Emergency Contact Persons
3.1 Rule 4.6.21(5) requires a Member to appoint emergency contact persons and furnish the contact information of such persons to SGX-ST. Members may appoint an emergency contact person and up to two (2) alternates. A template is attached as Appendix A to this Practice Note for the notification of contact information (postal address, email, telephone, mobile telephone and facsimile numbers) to SGX-ST.
Refer to Appendix A of Practice Note 4.6.21.
Refer to Appendix A of Practice Note 4.6.21.
3.2 Members are to ensure that the contact information provided to SGX-ST is updated on a semi-annual basis. Nonetheless, where there are changes to a Member's emergency contact persons and contact information, the Member should notify SGX-ST immediately in writing.
3.3 A Member's authorized emergency contact person should immediately notify SGX-ST in the event where:
(i) A Member's business operations are or will be significantly disrupted; and/or
(ii) A Member's business continuity plan is activated.
Practice Note 4.6.21; 12.1.1; 12.3.6; 12.6.4; 12.7.2; 12.10A.2: Operational Requirements for Trading Members Who Do Not Conduct Business in Singapore
| Issue Date | Cross Reference | Enquiries |
| Added on 19 May 201419 May 2014 and amended on 1 July 20161 July 2016 and 8 October 20188 October 2018. | Rule 4.6.21 Rule 12.1.1 Rule 12.3.6 Rule 12.6.4 Rule 12.7.2 Rule 12.10A.2 | Please contact Member Supervision:— Facsimile No : 6538 8273 |
1. Introduction
1.1. SGX-ST requires a Trading Member that does not hold a licence administered by the Monetary Authority of Singapore to meet the following operational requirements set out in the SGX-ST Rules:
a. maintain complete and accurate records pursuant to Rule 12.1.1(1);
b. send its customer a risk disclosure document setting out the risks associated with holding and trading of securities and futures contracts pursuant to Rule 12.3.6;
c. send its customer a contract note for the purchase or sale of securities or Futures Contracts pursuant to Rule 12.6.1;
d. send its customer a statement of account on a regular basis pursuant to Rule 12.7.1;
e. segregate customer's money and assets pursuant to Rule 12.10A.1.
A Trading Member that does not hold a licence administered by the Monetary Authority of Singapore may meet the above operational requirements by complying with the applicable comparable requirements prescribed by its Relevant Regulatory Authority.
1.2. This Practice Note sets out the factors that SGX-ST considers relevant when it reviews the requirements that the Trading Member is already subject to at the point of application, and on an ongoing basis, in the overseas market which it is carrying on business ("overseas market").
2. Factors that SGX-ST considers relevant
2.1. Complete and accurate records Pursuant to Rule 12.1, the Trading Member referred to in paragraph 1.1 should:
a. keep, or cause to be kept, such books as will sufficiently explain the transactions and financial position of its business and enable true and fair financial statements to be prepared from time to time;
b. keep, or cause to be kept, such books in such a manner as will enable them to be conveniently and properly audited; and
c. retain such books required by the Relevant Regulatory Authority.
2.2. Contract note Pursuant to Rule 12.6 the Trading Member referred to in paragraph 1.1 should issue to its customer a contract note which should contain the following information:
a. name of the customer;
b. date on which the purchase or sale of securities or futures contracts is entered into;
c. the price, amount and description of the securities or futures contracts;
d. settlement amounts;
e. fees charged by the Trading Member; and
f. fees charged by any other party(ies) and borne by the customer in addition to the fees charged by the Trading Member.
In addition, the contract note should be sent to the customer within a reasonable period from the execution of the trade.
2.3. Statement of account Pursuant to Rule 12.7, the Trading Member referred to in paragraph 1.1 should send to its customer a statement of account which should contain the following information:
a. the price, amount and description of the securities or futures contracts;
b. the status and movements of every asset in the Trading Member's custody held for the customer, including any asset deposited with a third party; and the date, reasons of the movement and amount of the asset involved;
c. the movement and balance of money received on account of the customer; and
d. any charges and credits to the customer's account carried on the books of the Trading Member..
2.4. Risk disclosure statement Pursuant to Rule 12.3.6, the Trading Member referred to in paragraph 1.1 should provide its customer a risk disclosure statement which should clearly state the features of securities and futures contracts and risks associated with holding and trading these instruments.
2.5. Customer's money and assets Pursuant to Rule 12.10A, the Trading Member referred to in paragraph 1.1 should:
a. segregate customers' monies and assets from the Trading Member's monies and assets; and
b. separately account for the monies and assets of each customer.
3. Determination of Comparability of Operational Requirements Set Out in Paragraph 1.1
3.1. SGX-ST may direct the Trading Member to comply with the requirements of the Securities and Futures Act and SGX-ST Rules if the operational requirements referred to in paragraph 1.1 above are deemed to be of insufficient comparability.
3.2. SGX-ST has the discretion to prescribe additional requirements where SGX-ST is of the opinion that there is insufficient comparability between the SGX-ST Rules, and the requirements prescribed by the Relevant Regulatory Authority.
4. Business Continuity Requirements
4.1. In addition to meeting the operational requirements referred to in paragraph 1.1 above, SGX-ST also requires the Trading Member referred to in paragraph 1.1 to meet any applicable business continuity plan requirements which are prescribed by the Relevant Regulatory Authority. The Trading Member may further adopt the recommended features in a business continuity plan set out in Practice Note 4.6.21.
Emergency Contact Persons
4.2. Rule 4.6.21(5) requires a Trading Member to appoint emergency contact persons and furnish the contact information of such persons to SGX-ST. Members may appoint an emergency contact person and up to two (2) alternates. A template for the notification to SGX-ST of contact information of such emergency contact persons (postal address, email, telephone, mobile telephone and facsimile numbers) is attached as Appendix A to this Practice Note.
4.3. Trading Members are to ensure that the contact information provided to SGX-ST is updated on a semi-annual basis. Nonetheless, where there are changes to a Trading Member's emergency contact persons and contact information, the Trading Member should notify SGX-ST immediately in writing.
4.4. A Trading Member's authorized emergency contact person should immediately notify SGX-ST in the event where:
a. A Trading Member's business operations are or will be significantly disrupted; and/or
b. A Trading Member's business continuity plan is activated.
Added on 19 May 201419 May 2014 and amended on 1 July 20161 July 2016 and 8 October 20188 October 2018.
Appendix A to Practice Note 4.6.21; 12.1.1; 12.3.6; 12.6.4; 12.7.2; 12.10a.2
Please click herehere to view Appendix A to Practice Note 4.6.21; 12.1.1; 12.3.6; 12.6.4; 12.7.2; 12.10A.2
Added on 19 May 201419 May 2014.
Practice Note 8.2.1 — Application of Market Phases and Algorithm
| Issue Date | Cross Reference | Enquiries |
| Amended on 17 February 201217 February 2012, 15 April 201315 April 2013, 24 February 201424 February 2014, 16 September 201616 September 2016, 13 November 201713 November 2017 and 8 October 20188 October 2018. | Rules 8.2.1–8.2.3 | Please contact Securities Market Control:— Email: securities.mc@sgx.com |
1 Introduction
1.1 This Practice Note explains the application of the various market phases and the algorithm used by SGX-ST in computing the single price for the Opening Routine, Mid-Day Break, Closing Routine and Adjust Phase.
1.2 Rule 8.2.1 says the trading hours and the application of the market phases are as published by SGX-ST.
1.3 Rule 8.2.1 says SGX-ST may vary the trading hours and application of the market phases.
1.4 Rule 8.2.2 sets out the various market phases.
Amended on 16 September 201616 September 2016 and 13 November 201713 November 2017.
2 Application of Market Phases
2.1 Summary of Market Phases
(1) Normal Day Trading
* Please see Point 2.2(2) and (3).
^ Please see Point 2.3A(2) and (3)
** Please see Point 2.5(3) and (4)
* Please see Point 2.2(2) and (3).
^ Please see Point 2.3A(2) and (3)
** Please see Point 2.5(3) and (4)
(2) Half-Day Trading
* Please see Point 2.2(2) and (3).
** Please see Point 2.5(3) and (4)
* Please see Point 2.2(2) and (3).
** Please see Point 2.5(3) and (4)
Amended on 1 August 20111 August 2011, 26 September 201126 September 2011, 15 April 201315 April 2013 and 13 November 201713 November 2017.
2.2 Opening Routine
(1) The Opening Routine is a 30-minute session before normal trading starts at 09:00 hours. It comprises a Pre-Open Phase and a Non-Cancel Phase.
(2) Pre-Open Phase (08:30 to 08:58–59 hours)
(a) Orders can be entered, modified or withdrawn in the ready and unit share markets.
(b) The bid (offer) can be higher (lower) than the offer (bid).
(c) No matching of orders.
(d) This phase will end randomly at any time from 08:58 to 08:59 hours.
(3) Non-Cancel Phase (08:58–59 to 09:00 hours)
(a) This phase will begin simultaneously with the end of the Pre-Open Phase, which may be at any time from 08:58 to 08:59 hours.
(aa) No input, amendment and withdrawal of orders.
(b) Orders that can be matched are matched at a single price computed based on an algorithm set by SGX-ST. The computed price will be the opening price for the day.
(c) Unmatched orders are carried forward into the morning trading session.
Amended on 26 September 201126 September 2011 and 15 April 201315 April 2013, 16 September 201616 September 2016 and 13 November 201713 November 2017.
2.3 Trading Phase
(1) For normal day trading, the morning Trading Phase is from 09:00 to 12:00 hours and the afternoon Trading Phase is from 13:00 to 17:00 hours. For half day trading, the Trading Phase is from 09:00 to 12:00 hours.
(2) Each Trading Phase allows order entry, order modification and withdrawal of orders. Orders are matched in the order of price priority followed by time priority.
(2A) All unmatched orders after the morning Trading Phase are carried forward to the Mid- Day Break.
(3) All unmatched orders after the afternoon Trading Phase and after the Trading Phase on half days are carried forward to the Closing Routine.
2.3A Mid-Day Break
(1) The Mid-Day Break is a 60-minute session that begins after the morning Trading Phase ends at 12:00 hours, and ends before the afternoon Trading Phase starts at 13:00 hours. It comprises a Pre-Open Phase and a Non-Cancel Phase.
(2) Pre-Open Phase (12:00 to 12:58–59 hours)
(a) Orders can be entered, modified or withdrawn in the ready and unit share markets.
(b) The bid (offer) can be higher (lower) than the offer (bid).
(c) No matching of orders.
(d) This phase will end randomly at any time from 12:58 to 12:59 hours.
(3) Non-Cancel Phase (12:58–59 to 13:00 hours)
(a) This phase will begin simultaneously with the end of the Pre-Open Phase, which may be at any time from 12:58 to 12:59 hours.
(b) No input, amendment and withdrawal of orders.
(c) Orders that can be matched are matched at a single price computed based on an algorithm set by SGX-ST. The computed price will be the opening price for the afternoon trading session.
(d) Unmatched orders are carried forward into the afternoon trading session.
Amended on 1 August 20111 August 2011, 16 September 201616 September 2016 and 13 November 201713 November 2017.
2.4 Adjust Phases
(1) An Adjust Phase operates upon the lifting of a suspension of a security or futures contract pursuant to Rule 8.10.6 and may also be applied pursuant to Rule 8.10.1A.
(a) The Adjust Phase sets in for 15 minutes. A longer time can be specified.
(b) Orders can be entered, modified or withdrawn for the ready and unit share markets.
(c) The bid (offer) can be higher (lower) than the offer (bid).
(d) Orders that can be matched will be matched at the end of the Adjust Phase at a single price computed based on an algorithm set by SGX-ST before normal trading resumes. Unmatched orders at the end of the Adjust Phase are carried forward into the phase of the market applicable when the Adjust Phase ends.
(2) However, the behaviour in paragraph 2.4(1)(d) does not apply in the following scenarios:
(a) When the end of the Adjust Phase coincides with the Opening Routine, Mid- Day Break or Closing Routine. In these circumstances, orders entered are carried forward into and matched accordingly in the respective Opening Routine, Mid- Day Break or Closing Routine.
(b) When SGX-ST specifies that the Adjust Phase is to be followed immediately by the Non-Cancel Phase. In these circumstances, a Non-Cancel Phase will begin simultaneously with the end of the Adjust Phase, which may be at any time within a one minute window. Orders are carried forward into the Non-Cancel Phase. Orders that can be matched will be matched at a single price computed based on an algorithm set by SGX-ST before normal trading resumes. Unmatched orders at the end of the Non-Cancel Phase are carried forward into the phase of the market applicable when the Non-Cancel Phase ends.
For illustrative purposes only:
SGX-ST specifies the Adjust Phase is to be followed immediately by a Non-Cancel Phase and further specifies that the Non-Cancel Phase will begin from 10:15h to 10:16h. In this case, the Adjust Phase will end simultaneously with the beginning of the Non-Cancel Phase at any time from 10:15h to 10:16h. Normal trading will begin at 10:17h.
For illustrative purposes only:
SGX-ST specifies the Adjust Phase is to be followed immediately by a Non-Cancel Phase and further specifies that the Non-Cancel Phase will begin from 10:15h to 10:16h. In this case, the Adjust Phase will end simultaneously with the beginning of the Non-Cancel Phase at any time from 10:15h to 10:16h. Normal trading will begin at 10:17h.
(c) When SGX-ST closes the market or suspends trading pursuant to Rule 8.10.1, at the end of the Adjust Phase.
(3) [Deleted]
Amended on 1 August 20111 August 2011 and 15 April 201315 April 2013, 16 September 201616 September 2016, 13 November 201713 November 2017 and 8 October 20188 October 2018.
2.5 Closing Routine
(1) The Closing Routine is a 6-minute session after trading stops at 17:00 hours for normal day trading, or 12:00 hours for half-day trading. It comprises a Pre-Close Phase and a Non-Cancel Phase.
(2) All unmatched orders are carried forward to the Closing Routine at 17:00 hours (for normal day trading) or 12:00 hours (for half-day trading).
(3) Pre-Close Phase (17:00 to 17:04–05 hours/12:00 to 12:04–05 hours)
(a) Orders can be entered, modified or withdrawn in the ready and unit share markets.
(b) The bid (offer) can be higher (lower) than the offer (bid).
(c) No matching of orders.
(d) This phase will end randomly at any time from 17:04 to 17:05 hours (for normal day trading) or 12:04 to 12:05 hours (for half-day trading).
(4) Non-Cancel Phase (17:04–05 to 17:06 hours/12:04–05 to 12:06 hours)
(a) This phase will begin simultaneously with the end of the Pre-Close Phase, which may be at any time from 17:04 to 17:05 hours (for normal day trading) or 12:04 to 12:05 hours (for half-day trading).
(aa) No input, amendment and withdrawal of orders.
(b) Orders that can be matched are matched at a single price computed based on an algorithm set by SGX-ST. Unless otherwise specified, the computed price will be the closing price for the day.
(c) [Deleted]
(5) This routine is designed to reduce the risk of manipulating closing prices with a single transaction at an unusually high or low price, just before the trading session ends.
Amended on 26 September 201126 September 2011 and 15 April 201315 April 2013 and 24 February 201424 February 2014, 16 September 201616 September 2016 and 13 November 201713 November 2017.
3 Algorithm Used by SGX-ST to Compute the Single Price at Which Orders at the End of the Opening Routine, Mid-Day Break, Closing Routine and Adjust Phase are Matched
3.1 The methodology for computing the single price at which orders at the end of the Opening Routine, Mid-Day Break, Closing Routine and Adjust Phase are matched (“Equilibrium Price”) is as follows1:—
(1) The Equilibrium Price is the price that has the largest tradable volume and the lowest imbalance. “Imbalance” refers to the net difference between the cumulative bid volume and cumulative ask volume. See Example 1.
Example 1
| Bid Volume | Price | Ask Volume | Cumulative Bid Volume (a) | Cumulative Ask Volume (b) | Tradable Volume | Imbalance (a)-(b) | Pressure |
| 0 | 3.750 | 10 | 340 | 10 | 10 | 330 | Buy |
| 0 | 3.760 | 20 | 340 | 30 | 30 | 310 | Buy |
| 50 | 3.770 | 50 | 340 | 80 | 80 | 260 | Buy |
| 100 | 3.780 | 80 | 290 | 160 | 160 | 130 | Buy |
| 70 | 3.790 | 30 | 190 | 190 | 190 | 0 | Nil |
| 30 | 3.800 | 40 | 120 | 230 | 120 | 70 | Sell |
| 90 | 3.810 | 20 | 90 | 250 | 90 | 160 | Sell |
In this example, the Equilibrium Price is $3.790 where the tradable volume is the largest and the imbalance is the lowest. If the highest tradable volume occurs at more than one price the algorithm will then consider imbalance, see sub-paragraph (2).
(2) If the highest tradable volume occurs at more than one price the Equilibrium Price is the price with the lowest imbalance. See Example 2.
Example 2
| Bid Volume | Price | Ask Volume | Cumulative Bid Volume (a) | Cumulative Ask Volume (b) | Tradable Volume | Imbalance (a)-(b) | Pressure |
| 0 | 3.750 | 10 | 340 | 10 | 10 | 330 | Buy |
| 0 | 3.760 | 20 | 340 | 30 | 30 | 310 | Buy |
| 50 | 3.770 | 50 | 340 | 80 | 80 | 260 | Buy |
| 100 | 3.780 | 110 | 290 | 190 | 190 | 100 | Buy |
| 70 | 3.790 | 20 | 190 | 210 | 190 | 20 | Sell |
| 30 | 3.800 | 40 | 120 | 250 | 120 | 130 | Sell |
| 90 | 3.810 | 20 | 90 | 270 | 90 | 180 | Sell |
In this example, the Equilibrium Price is $3.790 where the tradable volume is the largest (190) and the imbalance is the lowest (20).
If market orders are present a situation may arise in which the lowest imbalance occurs at “Market Price”, see sub-paragraph (2A).
If the highest tradable volume and lowest imbalance occur at more than one price the algorithm will then consider market pressure, see sub-paragraph (3).
If market orders are present a situation may arise in which the lowest imbalance occurs at “Market Price”, see sub-paragraph (2A).
If the highest tradable volume and lowest imbalance occur at more than one price the algorithm will then consider market pressure, see sub-paragraph (3).
(2A) If market orders are present and the market order volume on one side exceeds the cumulative order volume on the opposite side there would be a Market Order Surplus. This means that the lowest imbalance occurs at “Market Price”. In this situation, one tick will be added on the side with the Market Order Surplus and that would be the Equilibrium Price. See Example 2A.
Example 2A
| Bid Volume | Price | Ask Volume | Cumulative Bid Volume (a) | Cumulative Ask Volume (b) | Tradable Volume | Imbalance (a)-(b) | Pressure |
| MKT | 50 | 0 | |||||
| 3.750 | 10 | 50 | 10 | 10 | 40 | Buy | |
| 3.760 | 50 | 10 | 10 | 40 | Buy | ||
| 3.770 | 10 | 50 | 20 | 20 | 30 | Buy | |
| 10 | 3.780 | 50 | 20 | 20 | 30 | Buy | |
| 3.790 | 40 | 20 | 20 | 20 | Buy | ||
| 10 | 3.800 | 40 | 20 | 20 | 20 | Buy | |
| 3.810 | 30 | 20 | 20 | 10 | Buy | ||
| 30 | MKT | 30 | 20 | 20 | 10 | Buy |
In this example, the lowest imbalance (10) occurs where market order bid volume (30) exceeds cumulative ask volume (20). One tick has therefore been added on the bid side, and the Equilibrium Price is $3.810.
(3) If the highest tradable volume and lowest imbalance occur at more than one price (“the price overlap”) the Equilibrium Price is determined by market pressure:
(a) with only buy pressure within the price overlap, the Equilibrium Price is the highest price within the price overlap, or
(b) with only sell pressure within the price overlap, the Equilibrium Price is the lowest price within the price overlap. See Example 3.
Buy (sell) pressure occurs when the cumulative bid (offer) volume is greater than the cumulative offer (bid) volume at a particular price. Example 3
| Bid Volume | Price | Ask Volume | Cumulative Bid Volume (a) | Cumulative Ask Volume (b) | Tradable Volume | Imbalance (a)-(b) | Pressure |
| 0 | 3.750 | 10 | 260 | 10 | 10 | 250 | Buy |
| 0 | 3.760 | 20 | 260 | 30 | 30 | 230 | Buy |
| 50 | 3.770 | 50 | 260 | 80 | 80 | 180 | Buy |
| 0 | 3.780 | 110 | 210 | 190 | 190 | 20 | Buy |
| 90 | 3.790 | 0 | 210 | 190 | 190 | 20 | Buy |
| 30 | 3.800 | 40 | 120 | 230 | 120 | 110 | Sell |
| 90 | 3.810 | 20 | 90 | 250 | 90 | 160 | Sell |
In this example there is only buy pressure in price overlap, the Equilibrium Price is $3.790 which is the highest price in the price overlap.
(4) If the highest tradable volume and lowest imbalance occur at more than one price and there is both buy and sell pressure or nil pressure within the price overlap, the Equilibrium Price is:
(a) the price within the price overlap that is the closest to the last traded price, or
(b) where there is no last traded price, the lowest price within the price overlap.
See Example 4. Example 4
| Bid Volume | Price | Ask Volume | Cumulative Bid Volume (a) | Cumulative Ask Volume (b) | Tradable Volume | Imbalance (a)-(b) | Pressure |
| 0 | 3.750 | 10 | 260 | 10 | 10 | 250 | Buy |
| 0 | 3.760 | 20 | 260 | 30 | 30 | 230 | Buy |
| 50 | 3.770 | 50 | 260 | 80 | 80 | 180 | Buy |
| 0 | 3.780 | 130 | 210 | 210 | 210 | 0 | Nil |
| 90 | 3.790 | 0 | 210 | 210 | 210 | 0 | Nil |
| 30 | 3.800 | 40 | 120 | 250 | 120 | 130 | Sell |
| 90 | 3.810 | 20 | 90 | 270 | 90 | 180 | Sell |
In this example, assuming that the last traded price was $3.800, the Equilibrium Price is $3.790.
Amended on 15 August 201115 August 2011 and 17 February 201217 February 2012
1 The examples shown are not exhaustive.
Practice Note 8.2A.2 — Closing Price of Prescribed Instrument
| Issue Date | Cross Reference | Enquiries |
| Issued on 24 February 201424 February 2014, amended on 8 October 20188 October 2018. | Rule 8.2A.2 | Please contact Securities Market Control:— E-Mail Address : securities.mc@sgx.com |
1. Introduction
1.1 Rule 8.2A.2 of the Rules states that the closing price of a Prescribed Instrument shall be determined in accordance with the relevant formula and procedure applicable to each Prescribed Instrument, as determined by SGX-ST from time to time. In arriving at such formula and procedure, SGX-ST may take into account factors, including but not limited to:
(1) the last traded price;
(2) prevailing bids and offers during the trading phase and/or closing routine; and/or
(3) price data derived from pricing models, as selected or established by SGX-ST from time to time.
1.2 This Practice Note sets out the formulas and procedures used by SGX-ST to determine the closing price of Prescribed Securities as contemplated in the above Rule.
1.3 Unless the context requires otherwise, the following terms shall have the meanings ascribed to them in Practice Note 8.2.1:
(1) "Closing Routine"; and
(2) "Trading Phase".
1.4 The following securities, futures contracts or products or classes of securities, futures contracts or products shall be a Prescribed Instrument for the purpose of Rule 8.2A.1:
(1) Exchange traded funds.
2 Closing Price of Prescribed Instruments
2.1 Unless otherwise specified, SGX-ST may use any of the following as the closing price of a Prescribed Instrument for a Market Day:
(1) the single price at which orders are matched at the end of the Closing Routine as set out in Practice Note 8.2.1;
(2) the last traded price that occurred in the Closing Range;
(3) a price determined by SGX-ST taking into account the bid and offer prices present in the Trading System during the Closing Range;
(4) the last traded price that occurred prior to the Closing Range; or
(5) the closing price of the previous Market Day.
2.2 The Closing Range, for the purposes of this Practice Note, shall be the last 15 minutes of the Trading Phase, or such other time as may be determined by SGX-ST and notified to the market from time to time.
2.3 Where SGX-ST deems it necessary or desirable for ensuring a fair, orderly and transparent market or the integrity of the market, or for proper management of systemic risk in the market, SGX-ST may use an alternative formula and/or procedure to determine the closing price of a Prescribed Security.
2.4 SGX-ST shall, as soon as practicable, notify the Authority of any action taken by SGX-ST pursuant to paragraph 2.3 of this Practice Note.
Added on 24 February 201424 February 2014, amended on 8 October 20188 October 2018.
Practice Note 8.2.2 — Procedures for Contingency Order Withdrawal
| Issue Date | Cross Reference | Enquiries |
| Added on 2 November 20052 November 2005, amended on 3 April 20083 April 2008, 26 March 201226 March 2012, 26 August 201326 August 2013, 19 May 201419 May 2014 and 15 September 201715 September 2017. | Rule 8.2.2 (1) Rule 8.2.2 (3) Rule 8.2.2 (4) | Please contact Securities Market Control:— Hotline: 6236 8820 |
1. Introduction
1.1 This Practice Note explains the circumstances, conditions and operational procedures pursuant to which SGX-ST would assist Trading Members effect order withdrawals.
1.2 Rules 8.2.2 (1), (3) and (4) state that withdrawal of orders are allowed during certain market phases, in particular the Pre-Open/Pre-Close, Trading and Adjust phases. Generally, Trading Members may withdraw their orders at anytime provided that they do so in accordance with their respective internal operational and risk management procedures and applicable laws. However, SGX-ST recognizes that in certain circumstances Trading Members are unable to effect order withdrawals without the assistance of SGX-ST.
2. Technical Fault and Withdrawal by SGX on Reasonable Efforts Basis
2.1 In the event of Technical Faults, SGX-ST would assist in effecting order withdrawals at the request of the Trading Members and subject to the terms and procedures set forth below. "Technical Faults" as used herein refers to any loss of connection to the Trading System or any technical defects in any equipment, system, device or market facility which prevents a Trading Member from effecting order withdrawals without SGX-ST's assistance.
2.2 Order withdrawal by SGX-ST in the event of a Technical Fault would be effected on a reasonable endeavours basis. The Trading Member agrees that SGX-ST has no liability for order withdrawals and related activities conducted on behalf of a Trading Member.
2.3 The Trading Member indemnifies and will keep indemnified SGX-ST against all actions, proceedings, claims, demands, damages, costs, expenses and any other amounts against or incurred by SGX-ST arising out of or in connection with any action taken or any inaction by any of SGX-ST, or its officers, employers, agents, delegates or contractors with respect of such order withdrawals.
2.4 For the avoidance of doubt, nothing in this Practice Note should be construed as limiting a Trading Member's obligation to install and maintain a robust and technically sound system, risk management processes or business continuity plans as required under the Rules or any applicable laws.
2.5 Trading Members may request SGX-ST to withdraw orders at the following levels:
| a) Individual Order level | : based on Order ID no. |
| b) Firm level | : based on Trading Member Company Code / SGX Access User ID no. (where the firm has more than one SGX Access connection, it is possible to withdraw orders based on specific SGX Access User ID no) |
| c) Client level | : based on Client Account no of a specific SGX Access User ID no. |
3. Operational Safeguards and Discrepancies
3.1 A Trading Member must comply with the instructions and directions issued by Securities Market Control when effecting order withdrawals as contemplated herein. SGX-ST also reserves the right to refuse any such request without providing any reason.
3.2 All verbal requests for order withdrawals ("Request") would be recorded by SGX-ST. Trading Members are also required to comply with various operational safeguards and procedures as issued by Trading Market Control from time to time including matters relating to the:
(a) Appointment of Authorized Officers by Trading Members to effect order withdrawals and the provision of authentication details in connection therewith
(aa) Prompt notification to Securities Market Control of any changes to Authorized Officers, and any changes to an Authorized Officer's information
(b) Effecting Request via telephone numbers as designated by SGX-ST with verification by Securities Market Control on the identity of the caller by requiring the caller to respond correctly to two authentication questions
(c) Submission of an Order Withdrawal Form with the material information as requested by SGX-ST
(d) Processing of Request at firm level, client level and individual levels
3.3 If a Trading Member finds any discrepancies between the Order Withdrawal Form and the Request, the Trading Member should notify SGX Securities Market Control immediately with details of such discrepancies. Depending on the nature of the discrepancy, SGX Securities Market Control would generally rely on the voice recording for its post-withdrawal investigations.
Practice Note 8.6 — Application of the Forced Order Range
| Issue Date | Cross Reference | Enquiries |
| Added on 4 July 20114 July 2011, amended on 25 October 201225 October 2012, 26 August 201326 August 2013, 19 May 201419 May 2014, 7 July 20157 July 2015, 23 December 201523 December 2015, 19 May 201619 May 2016, 13 November 201713 November 2017 and 8 October 20188 October 2018. | Rule 8.6 | Please contact Enforcement: E-Mail Address: enforcement@sgx.com |
1 Introduction
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 ($) | Minimum Bid Size ($) | Forced Order Range |
| 1 | Stocks (excluding preference shares), Real Estate Investment Trusts (REITS), business trusts, company warrants and any other class of securities or futures contracts not specified in Rule 8.3.3 | Below 0.20 | 0.001 | +/- 30 bids |
| 0.20 – 0.995 | 0.005 | |||
| 1.00 and above | 0.01 | |||
| 1A | Structured warrants | Below 0.20 | 0.001 | +/- 30 bids |
| 0.20 – 1.995 | 0.005 | |||
| 2.00 and above | 0.01 | |||
| 2 | Exchange traded funds and exchange traded notes | All | 0.01 or 0.001 as determined by SGX-ST | +/- 30 bids |
| 3 | Debentures, bonds, loan stocks and preference shares quoted in the $1 price convention | All | 0.001 | |
| 4 | Debentures, bonds, loan stocks and preference shares quoted in the $100 price convention | 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.
Added on 4 July 20114 July 2011 and amended on 25 October 201225 October 2012, 26 August 201326 August 2013, 19 May 201419 May 2014, 7 July 20157 July 2015, 23 December 201523 December 2015, 19 May 201619 May 2016, 13 November 201713 November 2017 and 8 October 20188 October 2018.
Practice Note 8.6.12(4) — Computation of Monetary Loss
| Issue Date | Cross Reference | Enquiries |
| Issued on 24 February 201424 February 2014, amended on 8 October 20188 October 2018 | 8.6.12(4) | Please contact Enforcement:— E-Mail Address : enforcement@sgx.com |
1. Introduction
1.1. As set out in Rule 8.6.12(4), SGX-ST may consider the monetary loss involved when deciding whether to cancel an error trade under Rules 8.6.13, 8.6.13A and 8.6.13B.
1.2. This Practice Note sets out how monetary loss would be computed under Rule 8.6.12(4).
2. Computation of Monetary Loss 2.1. Subject to paragraph 2.2, the monetary loss referred to in Rule 8.6.12(4) will be the difference between the value of the error trade and the value of the intended trade. The value of the intended trade will be determined as:
(1) in the case of an error in the entry of the volume of the order, the value of a trade for the actual intended volume, at the price at which the order was entered;
(2) in the case of an error in the entry of the price of a structured warrant, the value of a trade for the volume of the order which was entered, at the Reference Price as determined in accordance with Rule 8.6.13(2);
(3) in the case of an error in the entry of the price of all other securities or futures contracts, excluding bonds, the value of a trade for the volume of the order which was entered, at the Reference Price in accordance with Rule 8.6.13A(2) or Rule 8.6.13A(3); and
(4) in the case of an error in the entry of the price of a bond, the value of a trade for the volume of the order which was entered, at:
(a) the last traded price immediately preceding the error trade, where such preceding trade was executed on the same trading day as the error trade; or
(b) the best bid or best offer price at the time of the execution of the first share of the error trade.
2.2. Where an erroneous order results in more than one (1) error trades, monetary loss will be the aggregate monetary loss of all such error trades executed at prices outside the upper and lower limits of the no-cancellation range applied pursuant to Rule 8.6.4A, which are referred to SGX-ST for review under Rule 8.6.3.
Added on 24 February 201424 February 2014, and amended on 8 October 20188 October 2018.
Practice Note 8.6.13A(3) — Alternative Reference Price For No-Cancellation Range
| Issue Date | Cross Reference | Enquiries |
| Issued on 24 February 201424 February 2014, amended on 23 December 201523 December 2015 and 15 September 201715 September 2017. | 8.6.13(3) | Please contact Enforcement:— E-Mail Address : enforcement@sgx.com |
1. Introduction
1.1 Rule 8.6.13A(3) provides that SGX-ST may, in its discretion, use an alternative price as the Reference Price for the no-cancellation range if (a) the price of the last good trade is not available; or (b) SGX-ST deems the price of the last good trade to be unreliable or inappropriate as a Reference Price.
1.2 In normal market conditions, the price of the last good trade is adopted as the Reference Price. However, SGX-ST has considered that there may be situations where the price of the last good trade is not available or not appropriate. In such situations, SGX-ST would seek to establish a Reference Price from alternative sources.
1.3. This Practice Note sets out the alternative prices that SGX-ST may consider in establishing the Reference Price when the price of the last good trade is inappropriate.
2. Alternative Prices 2.1. The table below sets out the alternative prices that SGX-ST may consider in establishing the Reference Price to determine the no-cancellation range.
| Instrument | Alternative prices that may be adopted as the Reference Price |
| Extended Settlement Contracts | • The previous closing price. • The price of the last good trade in the underlying stock. |
| American Depository Receipts | • The previous closing price of the underlying stock in home market. • The previous closing price of the ADR in the US market. |
| Exchange Traded Funds | • The previous closing price as determined in accordance with Rule 8.2A. • The average of the last quoted bid price and the last quoted offer price for the Exchange Traded Fund immediately preceding the error trade. The selection will not include the quotes provided by the Designated Market-Maker who is involved in the error trade which is under review. • The Indicative Net Asset Value. |
| Exchange Traded Notes | • The average of the last quoted bid and the last quoted offer price for the Exchange Traded Note immediately preceding the error trade. The selection will not include the quotes provided by the Designated Market-Maker who is involved in the error trade which is under review. • The price of other debt papers with a similar credit rating. |
| All other securities (excluding bonds and structured warrants) | • The previous closing price. • The average of the last quoted bid price and the last quoted offer price for the security immediately preceding the error trade. The selection will not include the quotes provided by the parties who are involved in the error trade which is under review. • A price derived from a pricing model established by SGX-ST. For example, in the case of a share consolidation, SGX-ST may use the last traded price prior to the effective date of the consolidation, adjusted for the consolidation ratio. |
3. Alternative Prices Unsuitable
3.1. Where SGX-ST determines that an appropriate Reference Price cannot be established, it will not establish a no-cancellation range.
Added on 24 February 201424 February 2014 and amended on 24 February 201424 February 2014, 23 December 201523 December 2015 and 15 September 201715 September 2017.
Practice Note 8.8.1 — Designated Instruments
| Issue Date | Cross Reference | Enquiries |
| Added on 1 July 20141 July 2014 and amended on 15 September 201715 September 2017 and 8 October 20188 October 2018. | Rule 8.8.1 Rule 8.8.2 | Please contact Surveillance: E-Mail Address: msursec@sgx.com |
1. Introduction
1.1 This Practice Note explains the circumstances under which the Board may declare a listed or quoted security or futures contract to be a "Designated Instrument".
2. Designation as a Regulatory Tool 2.1. SGX-ST has three key regulatory tools to support a fair, orderly and transparent market. They are as follows:—
(a) Query to listed companies — SGX-ST may issue a query to listed companies in situations where there is unusual trading that is not explained by announced developments or industry trends. The query serves to raise investors' awareness that trading activity is unusual;
(b) Designation of a security or futures contract — SGX-ST may declare a listed or quoted security or futures contract to be a "Designated Instrument" where, in SGX-ST's judgment, there is possible manipulation or excessive speculation in the security or futures contract (or its underlying), or it is otherwise in the interest of the market to do so; and
(c) Suspension — SGX-ST may suspend a security or futures contract where, in SGX-ST's opinion, the market is not orderly, informed or fair.
2.2 Designation is a tool that is used sparingly and only in exceptional circumstances which warrant such intervention. Such circumstances may include prolonged trading anomalies observed in the security or futures contract, such as order book imbalances and/or prolonged, excessive speculation in a security. The objective of designation is to restore market equilibrium by removing the impact of such anomalies on price formation, and allow the price of the security or futures contract to be formed through demand and supply forces in an informed market. Designation would be lifted once, in SGX-ST's opinion trading has returned to normalcy.
3. Conditions that may be imposed on a Designated Instrument
3.1 The conditions imposed on a Designated Instrument would depend on the circumstances leading to the designation of the security or futures contract. Examples of such conditions are listed below. One or more of these conditions may be imposed in a particular designation situation, and this list is not exhaustive.
(a) Requirement for collateral to be furnished. Trading Members may be required to obtain margins from each customer in respect of the customer's dealing in the Designated Instrument. This may also be imposed as a requirement for the Trading Member to obtain partial or full payment for any buy order from a customer, prior to executing the order. Such requirements would be specified in the conditions for the designation;
(b) Trading restrictions on specific Trading Members. Trading restrictions may also be imposed on specific Trading Members in relation to a Designated Instrument if the Trading Member has outstanding unsettled positions in the security (or the underlying security of the futures contract) that is more than 5% (or any percentage that the SGX-ST Board may prescribe) of the paid-up capital of the company whose securities are designated;
(c) Restrictions on sale. A prospective seller of a Designated Instrument may be prohibited from placing a sell order unless he is already holding the security (or underlying security of the futures contract) at the time of sale. The seller may be required to provide evidence that he/she holds the security (or the underlying security of the futures contract). This evidence could be in the form of statements by CDP or a custodian showing that the seller is holding a sufficient quantity of the security. Furthermore, the Trading Member may be required to sight such evidence prior to the execution of the sale order; and
(d) Other conditions such as prohibitions on short-selling, contra trading or Internet Trading.
Added on 1 July 20141 July 2014 and amended on 15 September 201715 September 2017 and 8 October 20188 October 2018.
Practice Note 8.10.1 — Characteristics of Suspension and Trading Halt
| Issue Date | Cross Reference | Enquiries |
| Added on 3 April 20083 April 2008, amended on 21 September 201121 September 2011, 26 March 201226 March 2012, 16 September 201616 September 2016 and 8 October 20188 October 2018. | Rules 8.10.1–8.11.1A | Please contact: Member Supervision Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com Securities Market Control E-Mail Address: securities.mc@sgx.com |
This Practice Note explains the characteristics of a suspension and a trading halt.
| ITEM | CHARACTERISTIC | SUSPENSION | TRADING HALT |
| 1 | Initiating party | A suspension can be imposed by SGX-ST under the circumstances stated in Rule 8.10.1. An Issuer may also request a suspension if its request for extension of a trading halt is not approved by SGX-ST. | A trading halt can be imposed by SGX-ST under the circumstances stated in Rules 8.11.1 and 8.11.1A. |
| 2 | Status of unmatched orders | During a market suspension, unmatched orders in the Trading System may lapse, as determined by SGX-ST. SGX-ST will notify Trading Members of the status of their unmatched orders before the lifting of a market suspension. During a suspension of a single security or futures contract, all unmatched orders will lapse. | During a trading halt, all existing orders in the ready and unit share markets remain valid. Orders can still be entered, modified or withdrawn in the ready and unit share markets but are not matched. |
| 3 | Duration of suspension or trading halt | A suspension may persist for a prolonged period. | A trading halt is usually intra-day, with a minimum duration of 30 minutes. SGX-ST may extend the duration of a trading halt beyond 3 Market Days upon the Issuers' request. |
| 4 | Upon lifting of suspension or trading halt | Upon lifting of a suspension, the suspended security or futures contract will enter into an Adjust Phase for at least 15 minutes. | Upon lifting of a trading halt, orders that can be matched will be matched at a single price computed based on the algorithm set by SGX-ST. Unmatched orders are carried forward into the respectiv e phase t he market is in when the trading halt is lifted. |
Practice Note 8.10A — Circuit Breaker
| Issue Date | Cross Reference | Enquiries |
| Issued on 24 February 201424 February 2014, amended on 23 December 201523 December 2015, 13 November 201713 November 2017 and 8 October 20188 October 2018. | Rule 8.10A | Please contact Securities Market Control:— Email: securities.mc@sgx.com |
1. Introduction
1.1. Rule 8.10A.1 states that SGX-ST may prescribe, for certain securities and futures contracts, Circuit Breakers which are designed to temporarily restrict trading in these securities and futures contracts.
1.2. Rule 8.10A.2 adds that SGX-ST shall impose a Cooling-Off Period on such security or futures contract referred to in Rule 8.10A.1 if an incoming order seeks to be matched, either partially or fully, with an existing order in the Trading System at a price outside the Circuit Breaker.
1.3. The Cooling-Off Period can guard against disorderly situations in the face of rapid and unchecked market movements, by allowing the market and regulators a pause to take stock of the situation.
1.4. It is not intended to halt price movement. A fundamental role of a capital market is timely and accurate price discovery; as such, the market should be allowed to determine its own prices so long as it remains fair and orderly. Where large price movements are justified, what the circuit breaker facilitates is a more measured market movement enabled by the imposition of pauses which allow the market to analyse market conditions and all available information before resuming. By moderating the pace of big price movements, the circuit breaker prevents alarm to the market and averts contagion risk to other markets.
2. Coverage of Circuit Breaker
2.1. Circuit Breakers will apply to the following instruments:
(1) Stocks and unit trusts that are components of the Straits Times Index or the MSCI Singapore Free Index;
(2) Stocks, stapled securities, Real Estate Investment Trusts, business trusts, funds, exchange-traded funds and exchange-traded notes that have a reference price at the start of the Market Day of 0.50 or more in the underlying currency that Market Day. In the case of Yen-denominated instruments, Circuit Breakers are applied if the reference price at the start of the Market Day is ¥500 (denoted as “0.50” in the Trading System) or more that Market Day; and
(3) Marginable Futures Contracts with underlying instruments falling within (1) or (2) above.
2.2. The instruments are assessed against the criteria set out in paragraph 2.1 above on a daily basis to determine if Circuit Breakers will apply that Market Day.
2.3. As stated in Rule 8.11.1A, SGX-ST may impose a trading halt on a security or futures contract when its underlying, or such instrument on the same underlying as SGX-ST may prescribe, is subject to a Cooling-Off Period pursuant to Rule 8.10A.2. This includes structured and company warrants. The duration of such halt will be aligned with the Cooling-Off Period.
3. Characteristics of Circuit Breakers and Cooling-Off Periods
3.1. A Circuit Breaker will have the following features:
(1) The Circuit Breaker is in operation during the Trading Phase.
(2) The Circuit Breaker, takes the form of a price band. Trading in a security or futures contract must be within or at the upper and lower thresholds of the price band. The price band is based on a prescribed percentage threshold from a reference price. The calculation of the price band is described in paragraph 4 below.
(3) When an incoming order seeks to match against a resting order at a price outside the upper or lower threshold, a Cooling-Off Period is activated. The incoming order is rejected and will not be matched at a price outside the upper and lower thresholds. An incoming order may have been partially matched against other orders up to the price band, beyond which the outstanding order would be rejected. The trades that were executed at or within the price band will not be affected by activation of the Cooling-Off Period, and only the outstanding volume of the incoming order will be rejected.
(4) During the Cooling-Off Period, trading in a security or futures contract continues at or within the price band that was established when the Cooling-Off Period was activated. If an incoming order seeks to match against a resting order at a price outside the upper or lower threshold, the incoming order will be rejected and will not be matched at a price outside the upper and lower thresholds. This will not extend the cooling-off period.
(5) After the Cooling-Off Period ceases, the upper and lower thresholds of the Circuit Breaker will be adjusted. The adjustment of the price band is described in paragraph 4. Trading in a security or futures contract will continue within and at the new price band.
3.2. When a Cooling-Off period is activated, the affected instrument(s) will have “CIRB” indicated in the Rmk column on the SGX website for the duration of the cooling-off period. The change in session state will also be broadcast to Trading Members.
3.3. The duration of the Cooling-Off Period is five minutes. The Cooling-Off Period will cease upon the commencement of any of the following, even if five minutes have not elapsed:
(1) Pre-Close Phase;
(1A) Mid-Day Break;
(2) Suspension; and
(3) Trading Halt.
3.4. The Equilibrium Price at the end of the Opening Routine, Mid-Day Break, Closing Routine or Adjust Phase will not activate a Cooling-Off Period (refer to SGX-ST Practice Note 8.2.1 for details on the Opening Routine, Mid-Day Break, Closing Routine and Adjust Phase).
4. Calculation of the Circuit Breaker
4.1. The upper threshold is 10% above the reference price and the lower threshold is 10% below the reference price:
4.2. The reference price for the start of the Trading Phase in each trading session is as follows:
(1) the opening price of the security for that trading session, failing which
(2) either
(a) (i) in the case of a Prescribed Instrument, the last traded price in the morning trading session, failing which, the closing price of the Prescribed Instrument on the previous Market Day, and (ii) in the case of any other security, the previous trading session's last traded price, or
(b) where a share consolidation or share split has occurred since the price stated in (a), a price derived from a pricing model established by SGX-ST (for example, the last traded price prior to the effective date of the consolidation, adjusted for the consolidation ratio), failing which
(3) the last available traded price.
4.3. The reference price at the start of the Trading Phase in each trading session is applicable to the first five minutes of that Trading Phase. The reference price for the rest of the Trading Phase is as follows:
(1) the last traded price as of five minutes prior to each potential trade, failing which
(2) the reference price at the start of the Trading Phase.
4.4. If there are trades done during the Cooling-Off Period, the reference price following the Cooling-Off Period will be as described in paragraph 4.3 above. If there are no trades done during the Cooling-Off Period, the first trade after the Cooling-Off Period will not be subject to the Circuit Breaker. The price of the first trade will then serve as the reference price for the five minutes following the trade. Thereafter, the reference price will be as described in paragraph 4.3 above.
4.5. In the event that an instrument is suspended or halted, the reference price immediately upon the lifting of a halt/suspension for a security will be as follows:
(1) the Equilibrium Price, failing which
(2) the last traded price in the Trading phase preceding the halt/suspension, failing which
(3) the reference price at the start of the Market Day.
4.6. The reference price of a Marginable Futures Contract is the reference price of its underlying instrument at all times.
5. Illustration of Circuit Breaker operation
Scenario 1
5.1. Security A has an opening price of $1.00. The Circuit Breaker will apply to Security A on that Market Day.
5.2. No trades are executed after the market opens.
5.3. At 11:00:00a.m, an incoming buy order for one lot of Security A at $1.20 attempts to match against a resting sell order for five lots of Security A at $1.20.
5.4. The reference price of Security A at 11:00:00a.m is $1.00 because there have been no trades in the Trading phase, and the opening price is $1.00. Therefore, the upper limit of Security A's Circuit Breaker at 11:00:00a.m is:
$1.00 + (10% x $1.00) = $1.10:
The lower limit is:
$1.00 − (10% x $1.00) = $0.90.
The lower limit is:
$1.00 − (10% x $1.00) = $0.90.
5.5. As the incoming buy order, if matched, would result in a trade outside the upper limit of the Circuit Breaker, it is rejected, and the Cooling-Off Period begins. The Cooling-Off Period is in place from 11:00:00a.m to 11:05:00a.m, during which trading can occur within the price band i.e. at or between $0.90 and $1.10: If a buy order for one lot of Security A at $1.20 is re-entered at this time, it is rejected.
5.6. No trades occur during the Cooling-Off Period. The first trade after the Cooling-Off Period will not be subject to the Circuit Breaker. If the incoming buy order for one lot of Security A at $1.20 is re-entered at this time (and the resting sell order for five lots at $1.20 is still in the order book), it will result in a traded price of $1.20. $1.20 will then be the new reference price for at least the next five minutes of trading.
Scenario 2
5.7. Security B has an opening price of $1.00. The Circuit Breaker will apply to Security B on that Market Day. At 10:00:00a.m, the last traded price as of five minutes ago (i.e. at 9:55:00a.m) is $0.90. This is therefore the reference price at 10:00:00a.m.
5.8. At 10:00:00a.m, two incoming sell orders are simultaneously placed for Security B at $0.82 (five lots) and $0.80 (five lots). The resting buy orders in terms of price priority are a resting buy order for five lots of Security B at $0.82, and another resting buy order for three lots of Security B at $0.80.
As the reference price of Security B at 10:00:00a.m is $0.90, the lower limit of Security B's price band is:
$0.90 − (10% of $0.90) = $0.81.
The upper limit is:
$0.90 + (10% of $0.90) = $0.99.
$0.90 − (10% of $0.90) = $0.81.
The upper limit is:
$0.90 + (10% of $0.90) = $0.99.
5.9. The incoming sell order will be matched at $0.82 (five lots) against the resting buy order for five lots at $0.82. The remaining sell order of $0.80 (five lots) will then attempt to match against the resting buy order for three lots of Security B at $0.80.
5.10. As the incoming sell order for $0.80, if matched, will result in a trade outside the lower limit of the price band, the order is rejected, and the Cooling-Off Period begins. The Cooling-Off Period is in place from 10:00:00a.m to 10:05:00a.m, during which trading can occur within the price band i.e. at or between $0.81 and $0.99.
5.11. A buy market order comes in at 10:01.00a.m for five lots at $0.83, and a sell order for five lots at $0.83 is entered at 10:02:00a.m. This results in a matched trade for five lots of Security B at 10:02:00a.m.
5.12. The reference price immediately after the Cooling-Off Period ends at 10:05:00a.m is $0.82, reflecting the traded price five minutes ago just prior to the start of the Cooling-Off Period. At 10:07:00a.m, the reference price becomes $0.83, reflecting the traded price five minutes ago at 10:02:00a.m.
6. Exemption of New Listings from circuit breaker
6.1. SGX-ST will exempt New Listings from the circuit breaker on the first day of trading. This is because the offer price of a New Listing may potentially differ significantly from market valuation. Applying the circuit breaker on the first day of trading may unnecessarily impede the price discovery process.
6.2. New Listings refer to the following instruments that are newly listed, regardless of whether they are subject to an initial public offering or is placed out:
(1) Stocks;
(2) Stapled securities;
(3) Real Estate Investment Trusts:
(4) Business trusts;
(5) Funds;
(6) Exchange-traded funds; and
(7) Exchange-traded notes.
6.3. New Listings will include stocks of companies that have been previously delisted but have gone through the listing process again.
6.4. New Listings will also include stocks/units that are created by distribution of dividends in-specie.
6.5. New Listings will not include any instruments that are created as a result of stock consolidation, stock splits and other similar actions which result in the replacement of existing counters. This is because the last traded price of the existing counters prior to delisting act as indicators which will allow market participants to adequately approximate the price of these new instruments. New Listings will therefore also not include temporary odd-lot instruments that are created as a result of corporate actions or rights issues, and will also exclude schemes of arrangement.
Added on 24 February 201424 February 2014, and amended on 24 February 201424 February 2014, 23 December 201523 December 2015, 13 November 201713 November 2017 and 8 October 20188 October 2018.
Practice Note 8.10.3 — Approval of Off-Market Trades in a Security or Futures Contract Subject to Suspension or Trading Halt
| Issue Date | Cross Reference | Enquiries |
| Amended on 3 April 20083 April 2008 and 8 October 20188 October 2018. | Rules 8.10.3–8.11.6 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1 Introduction
1.1 This Practice Note explains the rationale and the circumstances under which SGX-ST may approve the trading of a security or futures contract that is the subject of a suspension or trading halt.
1.2 Rule 8.10.3 says securities or futures contract which have been suspended from trading cease to be traded on the Trading System. Except with SGX-ST's approval, a Trading Member must not execute any transactions in a suspended security or futures contract.
1.3 Rule 8.11.7 says securities or futures contracts which are subject to a trading halt cease to be traded on the Trading System. Except with SGX-ST's approval, a Trading Member must not execute any transactions in a security or futures contract subject to a trading halt.
2 Rationale for Rules
2.1 All market participants should have equal opportunity. The objective of a suspension and trading halt is usually to facilitate proper dissemination of material information to the market place to ensure the operation of a fair market. Hence, SGX-ST Rules 8.10.3 and 8.11.6 stop all trading of a security or futures contract by a Trading Member if the security or futures contract is under suspension or trading halt. However, SGX-ST recognises that there may be circumstances under which off-market trading of the security or futures contract is appropriate.
3 Circumstances Under Which SGX-ST May Approve Off-Market Trades in A Security or Futures Contract Subject to Suspension or Trading Halt
3.1 SGX-ST may, on a case-by-case basis, approve off-market trades in a security or futures contract that is subject to suspension or trading halt, if the buying customer and selling customer are informed of the reasons for suspension or trading halt and there is a reason for the trade beyond simply wanting to trade. Circumstances under which SGX-ST may approve off-market trades include:—
(1) A seller, being in financial difficulty, needs to sell a security or liquidate a futures contract in relation to a security, that may be suspended for an indefinite period.
(2) A seller who short-sold a security or futures contract that is subsequently subject to suspension or trading halt, and the clearing house requires the seller to cover the short position within a prescribed period.
(3) A security or futures contract is suspended prior to delisting on SGX-ST. The minority shareholders may wish to sell the security or futures contract to the majority shareholders.
(4) The trustee of the estate of a deceased investor needs to liquidate a security or futures contract that may be suspended for an indefinite period.
Practice Note 8A — Obligations of Trading Members to Mark Sell Orders
| Issue Date | Cross Reference | Enquiries |
| Added on 11 March 201311 March 2013, amended on 15 September 201715 September 2017, 1 October 20181 October 2018 and 10 December 201810 December 2018. | Rule 8A.1 – 8A.6 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. INTRODUCTION
1.1 Rule 8A.3.1 requires each sell order for Specified Capital Markets Products to be marked to indicate to SGX-ST whether it is a Short Sell Order or a normal sell order. The quantity, volume or value of the Specified Capital Markets Product in which a person intends to make or is making a Short Sell Order shall also be indicated.
1.2 Rule 8A.3.1A states that a Trading Member and its Trading Representative shall not enter a sell order in the Trading System if a customer has not indicated whether the sell order is a Short Sell Order or a normal sell order and/or has not provided the information relating to the quantity, volume or value of the Specified Capital Markets Product in which the customer intends to make or is making a Short Sell Order.
1.3 Rule 8A.1.1 defines a "Short Sell Order" as any order to sell any Specified Capital Markets Product where the person who makes the order does not, at the time of the order, have an interest in the Specified Capital Markets Product as specified under section 137ZH of the Securities and Futures Act.
1.4 Rule 8A.3.3 requires a Trading Member to implement the necessary procedures and systems to facilitate compliance with the obligations set out in Rule 8A.3.1.
1.5 Rule 8A.4.2 states that SGX-ST may, at its discretion, waive the requirement to mark sell orders for specific classes of market participants.
1.6 Rule 8A.6.1 states that a Trading Member may submit a report of erroneously marked sell orders through such facility that is provided by SGX-ST and shall ensure that the report:
(a) adheres to the requirements for submission established by SGX-ST; and
(b) is complete and accurate.
1.7 This Practice Note further sets out a Trading Member's obligations pursuant to Rule 8A.3.1, 8A.3.3, and 8A.6.
1.8 SGX-ST will publish the short sale information collected in this manner before the start of each Market Day. Greater transparency to the market of short selling activities can be beneficial, by providing more timely information to better look after investors' interests, and to reduce the risk of manipulative or other unfair trading practices.
2. MARKING OF SELL ORDERS
2.1 The marking of sell orders should be viewed as part of information required for order entry.
2.2 Trading Members who are concerned about confidentiality of clients' order information should include in their client agreement that trading activities are subject to short selling requirements that are prescribed by SGX-ST and the Authority.
2.3 Trading Members should have in place the following measures to be in compliance with Rule 8A.3.3:
(a) Sell orders received through voice broking
Clear procedures should be in place to require Trading Representatives to ask a customer whether a sell order is a Short Sell Order or a normal sell order. Procedures should also be in place to ensure that the Trading Representative or the dealing assistant correctly enters the sell order into the Trading System. The Trading Member is not required to put in place voice recording facilities beyond its existing practices.
Clear procedures should be in place to require Trading Representatives to ask a customer whether a sell order is a Short Sell Order or a normal sell order. Procedures should also be in place to ensure that the Trading Representative or the dealing assistant correctly enters the sell order into the Trading System. The Trading Member is not required to put in place voice recording facilities beyond its existing practices.
(b) Sell orders entered through order management systems (including Internet Trading platforms)
The trading interface should require the customer to indicate whether a sell order is a Short Sell Order or a normal sell order at the point of order entry. It should also ensure that a sell order cannot be transmitted to the Trading System if it is not marked either as a Short Sell Order or a normal sell order.
The trading interface should require the customer to indicate whether a sell order is a Short Sell Order or a normal sell order at the point of order entry. It should also ensure that a sell order cannot be transmitted to the Trading System if it is not marked either as a Short Sell Order or a normal sell order.
(c) Sell orders entered by customers with Sponsored Access
A Trading Member must ensure that all customers with Sponsored Access to the Trading System ("Sponsored Customers") can fulfil the requirements of Rule 8A.3.3. A Trading Member must ensure that all Sponsored Customers have the necessary operational and technical systems and procedures in place:
A Trading Member must ensure that all customers with Sponsored Access to the Trading System ("Sponsored Customers") can fulfil the requirements of Rule 8A.3.3. A Trading Member must ensure that all Sponsored Customers have the necessary operational and technical systems and procedures in place:
(i) to enable sell orders to be marked as a Short Sell Order or a normal sell order at the point of order entry in the customer's order management system; and
(ii) to ensure that a sell order cannot be transmitted to the Trading System if it is not marked either as a Short Sell Order or a normal sell order.
When determining whether the obligation on Trading Members set out in this paragraph 2.3(c) has been fulfilled by Trading Members, a relevant consideration for SGX-ST is whether the requirements on Sponsored Customers have been set out in legally enforceable documents.
(d) Record keeping
A Trading Member's daily record of orders received from customers, maintained in accordance with Rule 13.9, should show whether a sell order is a Short Sell Order or a normal sell order.
A Trading Member's daily record of orders received from customers, maintained in accordance with Rule 13.9, should show whether a sell order is a Short Sell Order or a normal sell order.
2.4 A Trading Member should also require each seller to split partial short orders, where he does not own the full quantity of securities to be sold, into two separate orders. One order is for the portion he owns (i.e., normal sell order) and the other for the portion that he does not (i.e., Short Sell Order).
2.5 It is the responsibility of the end-investor to ensure that the sell order is accurately marked. The Trading Member is not required to verify that the customer has marked his sell order correctly.
3. DEFINITION OF A SHORT SELL ORDER
3.1 A person shall be deemed to have an interest in a Specified Capital Market Product if the person is deemed to have an interest in the Specified Capital Markets Product under section 137ZH of the Securities and Futures Act. Some examples of interest in a Specified Capital Markets Product are set out below:
(a) An investor purchases the shares on T. He subsequently sells the same quantity of the shares one day later (i.e., on T+1) with settlement obligation accordingly due on T+3. The order to sell the shares is a normal sell order.
(b) [deleted]
(c) An investor, whose shares in Company A are loaned out under a securities lending agreement, sells those shares on T. His settlement obligations are accordingly due on T+2. Under the terms of the securities lending agreement, the borrower is to return the shares to the investor before the time that the investor is to deliver the shares. The order to sell the shares is a normal sell order.
Compliance with Rule 8A.3.1 under specific circumstances
3.2 SGX-ST wishes to clarify the treatment of sell orders under the following scenarios:
(a) A seller holds his shares in trust with an overseas custodian. In the ordinary course of business, the shares are available to CDP for settlement. An order to sell these shares is a normal sell order.
(b) A seller holds shares listed on an overseas exchange and held with an overseas custodian. An order to sell these shares on SGX-ST is a normal sell order if in the ordinary course of business, the shares are available to CDP for settlement. In order for the shares to be available to CDP for settlement, the shares must be in the seller's depository account, or if he is settling through a depository agent, his depository agent's sub-account maintained with CDP. The seller is required to instruct the overseas custodian to transfer the shares into the seller's depository account or his depository agent's sub-account maintained with CDP.
(c) A seller lends his shares but has a right of recall under the relevant securities borrowing and lending agreement. An order to sell these shares is a normal sell order if in the ordinary course of business where the seller recalls the shares, the shares are available to CDP for settlement. The seller is not required to recall the shares prior to placing the order.
(d) A lender liquidates the shares that a borrower had placed with him as collateral, due to the default of a borrower. An order to sell these shares is a normal sell order.
(e) A seller borrows the amount of shares being sold prior to placing the sell order. The seller is not deemed to have an interest in the shares under the Securities and Futures Act. Therefore, the sell order is a Short Sell Order.
(f) [deleted]
(g) A seller agrees to buy shares at the day's closing price or at a volume-weighted average pricing as part of his client facilitation activities and does not have any reason to believe that the agreement would not be fulfilled. Before the price is confirmed, he sells the shares. The sell order is a normal sell order.
3.3 The marking of sell orders should be based on what the investor knows about its positions at the time of order entry. An example is set out below:
(a) An investor holds 5,000 shares of Stock A. He puts in a sell order for 5,000 shares of Stock A. This is a normal sell order. He also puts in a buy order for 3,000 shares of Stock A.
(b) Subsequently he enters a sell order for 2,000 shares of Stock A. At the point where he enters the sell order, the buy order for 3,000 shares of Stock A has not been filled. The investor should mark this sell order as a Short Sell Order.
3.4 [deleted]
4. REPORTING OF ERRONEOUSLY MARKED SELL ORDERS
4.1 A Trading Member can submit a report electronically to correct short sell information that was marked at order entry, in accordance with the requirements for submission established by SGX-ST.
4.2 The requirement to report erroneously marked sell orders only extends to erroneously marked sell orders which have been executed. If an erroneously marked sell order has not been executed, there is no requirement to make an error report.
4.3 For purposes of error reporting, the customer has to determine whether his sell orders marked as Short Sell Orders are accurate in light of the actual short sales volume executed and his actual shareholding. For example, a customer thought he does not own any shares of a counter, and entered an order to short sell 8,000 shares. The customer later discovers that he actually owned 2,000 shares of the counter.
(a) In a case where the order is totally executed
The customer has actually short sold only 6,000 shares (8,000 executed minus 2,000 owned). He will have to report the erroneously marked Short Sell Order, stating the volume that was disclosed as short sold (8,000 shares) and the actual short sales volume (6,000 shares).
The customer has actually short sold only 6,000 shares (8,000 executed minus 2,000 owned). He will have to report the erroneously marked Short Sell Order, stating the volume that was disclosed as short sold (8,000 shares) and the actual short sales volume (6,000 shares).
(b) In a case where the order is partially filled (e.g., only 4,000 shares executed)
The customer has actually short sold only 2,000 shares (4,000 executed minus 2,000 owned). He will have to report the erroneously marked Short Sell Order, stating the volume that was disclosed as short sold and that was executed (4,000 shares) and the actual short sales volume (2,000 shares).
The customer has actually short sold only 2,000 shares (4,000 executed minus 2,000 owned). He will have to report the erroneously marked Short Sell Order, stating the volume that was disclosed as short sold and that was executed (4,000 shares) and the actual short sales volume (2,000 shares).
4.4 SGX-ST relies on the submissions of the Trading Members to publish an updated weekly aggregate report. Therefore, Trading Members must ensure that the report:
(a) adheres to the requirements for submission established by SGX-ST; and
(b) is complete and accurate.
4.5 A Trading Member is to ensure that the requisite fields in the report are completed in the correct format and the information communicated by their customers is accurately conveyed in the report. Reports that are not in the correct format, named incorrectly or have the securities name and code not correctly entered will not be processed.
4.6 SGX-ST may request for records of corrections to short sell information at the individual order level from Trading Members. Trading Members should retain this information in accordance with Rule 12.1.1.
4.7 The report can be submitted from the start of the trading day following the date of the sale to 17:45 hours on that day.
4.8 A Trading Member may wish to take note of the following matters on the submission of the report:
(a) A Trading Member should submit a single report for all Specified Capital Market Products that have been misreported. If the Trading Member wishes to update its report for the same Market Day, it should submit a revised report with the same file name before the deadline set out in paragraph 4.7.
(b) The transmission of the report will be via a designated Secured File Transfer Protocol ("SFTP") folder. Trading Members who do not have access to the designated SFTP folder should contact SGX-ST to apply for the requisite access.
(c) In the event that the SFTP is unavailable, SGX-ST will extend the submission period. Trading Members will be informed of the extended submission period by way of circular.
5. EXEMPTION FROM MARKING OF SELL ORDERS
5.1 SGX-ST may waive the requirement to mark sell orders for specific classes of market participants.
5.2 All persons exempted from section 137ZJ(1) of the Securities and Futures Act are, to the same extent and subject to the same conditions, exempted from Rule 8A.3.
5.3 [deleted]
5.4 [deleted]
5.5 [deleted]
Practice Note 9.4.3A(b) Money Received on Account of Customer
| Issue Date | Cross Reference | Enquiries |
| Added on 10 December 201810 December 2018. | Rule 9.4.3A(b) | Please contact Member Supervision:— E-Mail Address: membersup@sgx.com |
1. Rule 9.4.3A(b) states that a buying customer, who is not a buying customer specified in Rule 9.4.3A(a), must pay the Trading Member for its trade on Intended Settlement Day, regardless of whether securities have been delivered by CDP.
2. For the avoidance of doubt, where securities have not been delivered by CDP on Intended Settlement Day, the payment by the customer provided in Rule 9.4.3A(b) shall be treated as money received on account of its customer for the purposes of SFR (Licensing and Conduct of Business). The Trading Member must therefore still comply with Rules 12.11 and 12.12 in relation to any money paid by the buying customer to the Trading Member, including, where relevant, the requirement to deposit the money received on account of its customer in a trust account no later than such time as required in the SFR (Licensing and Conduct of Business). The Trading Member is permitted to withdraw such money from the trust account for the purpose of making payment to CDP for the customer's trade when such payment is due.
3. This Practice Note does not preclude the Trading Member from applying the payment towards permitted uses as set out in the SFR (Licensing and Conduct of Business) and/or relevant law.
Practice Note 11.7A.1, 11.8A.1 — Exposure to Single Customer and Single Security
| Issue Date | Cross Reference | Enquiries |
| Added on 19 May 201419 May 2014 | Rule 11.7A.1, Rule 11.8A.1 | Please contact Securities Market Control:— Facsimile No : 6538 8273 |
1. Introduction
1.1. Rules 11.7A.1 and 11.8A.1 require Trading Members that hold a licence specified in Rule 4.1.1(1)(b) to have in place adequate tools and procedures to monitor their exposure to a single customer or single security.
1.2. Such Trading Member may be required to demonstrate the adequacy of such tools and procedures. This Practice Note explains the tools and procedures which a Trading Member may have in place to satisfy the requirement for adequate tools and procedures.
2. Adequate Tools and Procedures
2.1. Tools and procedures to monitor a Trading Member's exposure to a single customer or single security which SGX-ST deems adequate include, but are not limited to the following:—
(a) The Trading Member may, based on its available financial resources, establish the level of concentration risks arising from exposure to a single customer or security acceptable to it. Thereafter, the Trading Member should monitor its exposures to a single customer or single security against such acceptable level of risk.
(b) The Trading Member may have in place adequate systems to monitor the Trading Member's exposure to customers on an individual customer and aggregated basis, and generate reports describing the results of such monitoring.
2.2. SGX-ST shall have the right to require such Trading Member to demonstrate the adequacy of such tools and procedures as it deems necessary.
Practice Note 12.3.1 — Verification Procedure in Respect of Customer's Identity
| Issue Date | Cross Reference | Enquiries |
| Added on 1 December 2003 Amended on 19 May 201419 May 2014 | Rule 12.3.1 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1 Introduction
1.1 Rule 12.3.1 requires a Trading Member to take suitable steps to verify an individual customer's identity if the customer does not open an account in person.
1.2 This Practice Note sets out the procedures that a Trading Member should take to verify an individual customer's identity if the customer does not open an account in person.
2 Verification Procedure
2.1 A Trading Member may employ 1 or more of the following means to establish a customer's identity:—
(1) Accept account opening forms that are certified by:—
(a) a Justice of Peace, a commissioner for oaths, a notary public, or an advocate and solicitor;
(b) members of other securities exchanges which have established information sharing agreements with SGX-ST; or
(c) branches of banks which the customer holds a banking account.
A Trading Member may verify the certification through direct telephone contact with persons performing the certification;
(2) Establish telephone contact with the applicant on an independently verified home or business number;
(3) With the customer's consent, contact the personnel department of the customer's employer on a listed business number to confirm his employment; or
(4) Obtain from the customer statements from a bank, Central Provident Fund Board, income tax authority or such equivalent authority.
3 Digital Signature
3.1 A Trading Member is encouraged to explore the use of digital signatures for online identification and verification. The identification and verification procedures for acceptance of digital signatures must be at least as rigorous as those which a Trading Member would normally have employed.
Practice Note 12.3A.1 — Customer Education
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012. | Rule 12.3A.1 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note provides guidance on the information that a Trading Member should provide to its Internet Trading customers.
2. Information, Guidance and Training
2.1 A Trading Member should provide its Internet Trading customers with adequate information, guidance and training with respect to the areas below.
2.2 Prohibited trading practices, which refer to trading practices prohibited under these Rules, the Act or other Singapore laws.
2.3 Potential limitations and risks of Internet Trading, which include:—
(a) possibility of delays in order transmission and confirmation of order execution, and what to do in case of such delays;
(b) not being able to withdraw erroneous orders in time due to the speed of electronic trading; and
(c) danger of unauthorised access to a customer's internet account and recommended preventive security measures in relation to matters such as the protection of passwords and leaving an on-line screen unattended.
2.4 System functionalities and order management procedures, which include:—
(a) system access requirements;
(b) how to place, modify and withdraw orders;
(c) types of trading controls e.g. types of error-prevention alerts and how to interpret system alerts;
(d) types of credit controls e.g. types of trading limits; and
(e) types of orders e.g. Good till Cancelled and All or None.
2.5 Market conventions, which include:—
(a) board lot size;
(b) minimum bid size;
(c) convention for price quotation of different securities; and
(d) corporate actions and their effect on prices.
Added on 18 September 201218 September 2012.
Practice Note 12.3.1, 12.3.2 —Customer Account
| Issue Date | Cross Reference | Enquiries |
| Added on 21 June 200621 June 2006 and amended on 3 April 20083 April 2008, 19 May 201419 May 2014, 29 December 201429 December 2014, 1 July 20161 July 2016 and 8 October 20188 October 2018. | Rule 12.3.1, Rule 12.3.2 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note explains the circumstances, conditions and operational procedures pursuant to the requirements to obtain particulars of customers and to understand their investment objectives.
2. Customer Account
2.1 Rules 12.3.1(1) and 12.3.2(1) require a Trading Member to obtain particulars of a customer and understand the investment objectives. The purpose is to ensure that the Trading Member abides by the know-your-customer principle.
2.2 Investment objectives of a customer would include:—
(a) the risk appetite of the customer;
(b) the types of securities or futures contract that the customer may want to trade in, such as —
(i) securities or futures contracts listed or quoted on SGX-ST, and
(ii) securities offered in reliance on the exemptions under Sections 274 or 275 of the Securities and Futures Act, Chapter 289 of Singapore ("SFA"), where the requirement to lodge a prospectus or profile statement with the Authority before making an offer of the securities does not apply.
(c) such other objectives prescribed by the Relevant Regulatory Authority. 2.3 Securities offered in reliance on the exemptions under Sections 274 or 275 of the SFA may include:—
(a) Relevant Debt Securities;
(b) Global Depository Receipts ("GDRs"); and
(c) such other securities that are offered pursuant to the exemptions.
2.4 Trading Members that hold a Capital Markets Services Licence should bear in mind the effect of Sections 274, 275 and 276 of the SFA. If a customer wants to trade in a security that is offered in reliance on the exemptions under Sections 274 or 275 of the SFA, Trading Members should —
(a) explain to the customer the effect of Sections 274, 275 and 276 of the SFA, and the definition of "Relevant Person" under Section 275 of the SFA;
(b) obtain documents to satisfy themselves that the customer is an institutional investor or a Relevant Person; and
(c) prominently disclose to the customer in writing that —
(i) the aforesaid security is a security offered in reliance on the exemptions under Sections 274 or 275 of the SFA,
(ii) for such a security, the requirement to lodge a prospectus or profile statement with the Authority and SGX-ST does not apply.
2.5 For the avoidance of doubt, the above requirements are applicable to the trading of GDRs which are offered in reliance on the exemptions under Sections 274 or 275 of the SFA. Trading Members should also observe relevant provisions of the Listing Manual in relation to GDRs.
2.6 All the documents obtained under paragraph 2.4(b) should form part of the permanent records of the Trading Members. If the customer's account carried on the books of the Trading Member is closed, the documents should be kept for at least the minimum period required by law.
Practice Note 12.3.1, 12.3.4 — Additional Safeguards for Trading by Young Investors
| Issue Date | Cross Reference | Enquiries |
| Added on 14 May 200914 May 2009 Amended on 19 May 201419 May 2014 and 1 July 20161 July 2016. | Rule 12.3.1, Rule 12.3.4 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 With effect from 1 March 2009, the age of contractual capacity under the Civil Law Act has been lowered from 21 to 18. Accordingly, the minimum age requirement for securities account holders is lowered to 18.
1.2 In relation to a Trading Member that holds a licence specified in Rule 4.1.1(1)(b), the minimum age requirement for securities account holders in the jurisdiction of such Trading Member ("Foreign Acceptable Age") shall be such minimum age as prescribed by the Relevant Regulatory Authority. Where no Foreign Acceptable Age is prescribed by the Relevant Regulatory Authority, the Foreign Acceptable Age shall be 18.
1.3 SGX-ST recognises that individuals above the age of 18 or the Foreign Acceptable Age and below the age of 21 years ("Young Investors") may be new to the securities market and have limited trading experience. These Young Investors may not fully appreciate the risks of securities and other investment products offered to them.
1.4 This Practice Note sets out the measures and operational procedures that Trading Members should take as part of good business practice when Young Investors open securities trading accounts with them.
2. Account Opening Procedures
2.1 SGX-ST Rules 12.3.1 and 12.3.4 require a Trading Member to obtain the particulars of a customer and to understand the customer's investment objectives.
2.2 When a Young Investor opens an account carried on the books of the Trading Member, the Trading Member should undertake the following procedures, in addition to their own account opening procedures, and give appropriate emphasis to the following:—
(a) Suitability assessment — Trading Member should assess the suitability, taking into account the financial knowledge and risk capacity of the Young Investors to trade. A specific suitability assessment should also be made before allowing a Young Investor to trade in more complex instruments or products (such as a derivative contract or product with embedded derivatives). The decision to allow the Young Investor to trade in such instruments or products should be approved by a senior executive of the Trading Member. A Trading Member that holds a licence specified in Rule 4.1.1(1)(b) should carry out suitability assessments of Young Investors in accordance with the applicable standards prescribed by the Relevant Regulatory Authority.
(b) Risk disclosure — The risks and uncertainties associated with investing or trading in securities and other products to be sold by the Trading Member should be properly explained to the Young Investor. This is to ensure that he or she has an appropriate understanding of the key risks and commitments involved. A Trading Member that holds a licence specified in Rule 4.1.1(1)(b) should provide risk disclosure to Young Investors in accordance with the applicable standards prescribed by the Relevant Regulatory Authority.
3. Supervision
3.1 Trading Members should ensure that the relevant staff members are adequately trained and familiar with the safeguards put in place for Young Investors. Similarly, any additional procedures should be communicated to all Trading Representatives to ensure proper adherence and consistent application.
3.2 In addition, a senior executive should be appointed to oversee and take responsibility for managing all issues relating to Young Investors. This includes monitoring the Trading Member's dealings with the Young Investors and making appropriate adjustments to the procedures and processes, where necessary.
4. Investor Education
4.1 Trading Members should offer basic investment courses to Young Investors, as well as product-specific courses to those who wish to trade in more sophisticated instruments and products. These courses will enable Young Investors to be more aware of the implications of their trading decisions and to be able to make better investment choices.
4.2 Such courses may be organised or conducted by third party course providers or in-house trainers.
Practice Note 12.6.1 — Contract Notes
| Issue Date | Cross Reference | Enquiries |
| Added on 1 July 20161 July 2016, amended on 8 October 20188 October 2018. | Rule 12.6.1 | Please contact Member Supervision: Facsimile No : 6538 8273 |
1. Introduction
1.1. Rule 12.6.1 requires a Trading Member to send its customer a contract note for the purchase or sale of securities or futures contracts.
1.2. This Practice Note provides guidance on:
1.2.1. other Rules which are of relevance to the requirement to send contract notes to customers; and
1.2.2. the internal controls that Trading Members should have with respect to operational processes for sending contract notes to customers.
2. Other Relevant Rules
2.1. Rule 12.6.1 should be read together with the following Rules:
2.1.1. Rule 12.9.1 requires a Trading Member to communicate directly with its customers in respect of statements, contract notes, or all other information, whether in writing or electronically, unless the customer has authorised otherwise in writing;
2.1.2. Rule 12.9.2 requires that a Trading Member must not allow any person other than the customer to collect any cash, share certificates, contract notes, credit or debit notes, cheques or statements, unless the customer has authorised that person in writing; and
2.1.3. Rule 12.14.1 requires a Trading Member to have processes in place to minimise and manage any conflicts of interest, including but not limited to separating its front office and back office functions to prevent any conflict of interests.
3. Internal Controls with Respect to Contract Notes
3.1. Trading Members should have appropriate internal controls in place to ensure that no contract note is omitted or suppressed. Basic controls that Trading Members should have in place include the following:
3.1.1. proper controls to maintain the accuracy of customers' contact information;
3.1.2. robust controls over the generation and dissemination of contract notes;
3.1.3. proper segregation between the personnel responsible for trade execution and the personnel responsible for generating and disseminating contract notes; and
3.1.4. ensuring that appropriate channels are available for customers to enquire about or verify transactions reflected in their contract notes.
Practice Note 12.6.3(2) — Evidence of Informed Consent for Contract Notes in Electronic Form
| Issue Date | Cross Reference | Enquiries |
| Added on 12 August 201612 August 2016. | Rule 12.6.3(2) | Please contact Member Supervision: Facsimile No : 6538 8273 |
1. Introduction
1.1. Rule 12.6.3(2) requires that a Trading Member, before issuing contract notes in electronic form, must obtain the customer's prior revocable and informed consent. The Trading Member must retain evidence of the customer's consent. To constitute an informed consent, a customer must be told of the manner of delivery and retrieval of the electronic record and any costs that may be incurred.
1.2. This Practice Note provides guidance on how a Trading Member may show evidence of informed consent in accordance with SGX-ST Rule 12.6.3(2).
2. Evidence of Informed Consent
2.1. To show evidence of informed consent to receive electronic contract notes in accordance with SGX-ST Rule 12.6.3(2), a Trading Member should maintain records to show that each customer that is provided with electronic statements instead of paper statements had been given adequate prior notice of the cessation or non-provision of paper statements and provided with instructions on how to opt out of electronic-only statements.
Added on 12 August 201612 August 2016.
Practice Note 12.14.1 — Conflicts of Interest
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012. | Rule 12.14.1 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note provides guidance on how front office and back office functions of Trading Members should be separated, in accordance with Rule 12.14.1.
2. Separation of Key Functions
2.1 The purpose of separating a Trading Member's various key functions is to minimise and manage conflicts of interests among these functions.
2.2 Examples of proper separation include:—
(a) access into the dealing or trading room to be restricted to authorised personnel only;
(b) setting and authorising credit or trading limits on customers by senior management staff who are independent of sales and dealing functions, and are not related to the customer in question;
(c) setting and authorising credit or trading limits on Trading Representatives by senior management staff who are independent of sales and dealing functions; and
(d) having adequate separation of management responsibilities e.g the heads of sales, dealing, or marketing functions should not have responsibilities over all middle and back office functions of Trading Members.
2.3 The basis for determining and amending trading limits should be properly documented. Adequate audit trail reports should be maintained to show all changes to trading limits, the date and time of the modifications and the authorised person who approved the changes. In addition, sufficient checks and procedures should be in place to ensure that all limits and parameters set and modified by the credit control administrator are accurate and have been approved.
Added on 18 September 201218 September 2012.
Practice Note 12.17.1 — Review of Remisier's Personal Trades
| Issue Date | Cross Reference | Enquiries |
| Added on 1 December 2003. | Rules 12.17.1 and 12.17.6 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1 Introduction
1.1 This Practice Note sets out the need for more frequent reviews of the trading activities of Remisiers.
2 Need for More Frequent Reviews
2.1 Rule 12.17.1 requires a Trading Member to approve the personal trades of its Directors, Officers, Dealers and employees before these trades can be effected. This Rule does not require a Trading Member to approve Remisiers' personal trades. However, as a good control measure, Trading Members should conduct more frequent reviews of the trading activities of its Remisiers. This is also in line with Rule 12.17.6 which requires a Trading Member to have in place procedures to monitor the trading activities of its Remisiers, amongst other persons. The frequency of these reviews should be conducted at a level where the Trading Member is confident that its Remisiers' trading activities are above board.
Practice Note 12.20.1 — Soft Dollar Receipts or Payments
| Issue Date | Cross Reference | Enquiries |
| Added on 1 December 2003. | Rules 12.20.1 and 12.20.2 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1 Introduction
1.1 Rule 12.20.1 says that a Trading Member and its Trading Representatives may receive goods and services from a broker for directing business to the broker under certain conditions.
1.2 Rule 12.20.2 says that a Trading Member may pay for goods and services to a customer for directing business to the Trading Member under certain conditions.
1.3 This Practice Note provides guidance on the types of goods and services that do not qualify for soft dollar receipts or payments.
2 Good and Services that Do Not Qualify as Soft Dollar Receipts or Payments
2.1 The following goods and services do not qualify as acceptable soft dollar receipts or payments for the purpose of Rule 12.20}:—
(1) Travel, accommodation and entertainment expenses.
(2) General administrative goods and services including office equipment and premises expenses.
(3) Membership fees.
(4) Employees' salaries.
(5) Direct money payment. This does not include payment of referral fees under a referral agreement.
2.2 A Trading Member or its Trading Representative should not receive goods and services from a broker, if the act of it compromises the interest of the customer or may result in the breach of the Rules or other regulatory requirements by the Trading Member or its Trading Representatives.
Practice Note 12A.4.1, 12A.5.2 — Position Account Allocation
| Issue Date | Cross Reference | Enquiries |
| Added on 1 July 20161 July 2016 and amended on 10 December 201810 December 2018. | Rules 12A.4.1, 12A.5.2. | Please contact Member Supervision Facsimile No : 6538 8273 |
1. Rule 12A.4.1 requires each TPC Trading Member to instruct its qualifying Clearing Member to allocate the position of each trade executed by the Trading Member to the Trading Member's Position Account or, where the position is of a trade executed for a customer, in accordance with that customer's instructions, as soon as practicable, and in any event no later than such time as may be required for timely and orderly settlement of the relevant trade into the intended Securities Account. This Practice Note provides guidance on the timelines within which such allocation is to be completed by in various circumstances.
2. With the exception of warehoused trades, each Trading Member shall instruct its qualifying Clearing Member to allocate the position of each trade cleared by the Clearing Member for the Trading Member to a specified Position Account immediately upon the trade being cleared, or at the latest by the end of the next Market Day immediately following the trade date.
3. For warehoused trades under Rule 12A.5.2, each Trading Member must ensure that no customer's trade is warehoused for more than one Market Day, unless under exceptional circumstances. The Trading Member shall instruct its qualifying Clearing Member to allocate the position of each trade to a specified Position Account immediately after the order is completed, or at the latest by the end of the Market Day on which the order is completed.
Practice Note 13.4.1 — Customer Orders — Precedence
| Issue Date | Cross Reference | Enquiries |
| Amended on 1 July 20051 July 2005, 3 April 20083 April 2008 23 January 200923 January 2009 1 July 20161 July 2016 and 8 October 20188 October 2018. | Rule 13.4.1 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1 Introduction
1.1 This Practice Note explains the application of Rule 13.4.1.
1.2 Rule 13.4 states that a Trading Member or a Trading Representative must not deal in securities or trade in futures contracts for his or her own account or for a Prescribed Person's account if the Trading Representative has an unexecuted order on the same terms from a customer. However, this Rule does not apply if the Trading Representative does not have access to customer's order flow information while executing for his own account or for the Prescribed Person's account.
2 Application of Rule 13.4.1
2.1 An order includes an order for a single stock futures contract or futures contracts.
2.2 An unexecuted order from a customer includes an order that has been received but not entered into the Trading System.
2.3 "On the same terms" includes:—
(1) orders for the same counter, same buy/sell instruction and limit price;
(2) a price limit order and a careful discretion order in the same counter and same buy/sell instruction; and
(3) an order for the underlying security on the one hand and an order for single stock futures or Marginable Futures Contracts over that underlying security on the other.
2.4 Rule 13.4.2(4) includes a person, group of persons, a Corporation or a group of Corporations or family trusts, whom the Trading Member, Director, employee or Trading Representative of the Trading Member is associated with or connected to under the definition of "Prescribed Person", However, this does not apply where the Trading Member, Director, employee or Trading Representative of the Trading Member has no control or influence over the associated or connected person, group of persons, Corporation or group of Corporations, or family trusts.
2.5 The Trading Member or Trading Representative must ensure that customers' orders are not compromised when squaring off a house error position on the same terms. Where the customer's order is a careful discretion order, trades allocated to the customer's account must not be worse off to that allocated to the house error account (such accounts being accounts carried on the books of the Trading Member).
2.6 In considering whether Rule 13.4.1 has been complied with, the following factors are relevant:—
(a) the Trading Member or the Trading Representative acts in accordance with the Trading Member or the Trading Representative's customers' instructions;
(b) orders that do not involve the exercise of discretion by the Trading Representative are entered in the sequence in which they are received, and otherwise as expeditiously as practicable;
(c) in the situation where the time the orders were received cannot be clearly established and one of the orders is for the Trading Member or the Trading Representative's own account, the Trading Member or the Trading Representative gives preference to the order of a customer over any order for the Trading Member or the Trading Representative's own account;
(d) the Trading Member or the Trading Representative who is aware of a customer's unexecuted instructions ensures that he or she does not use that information to:—
(i) the disadvantage of the customer; or
(ii) the Trading Member or the Trading Representative's own benefit.
Practice Note 13.8.1 — Market Manipulation and False Market
| Issue Date | Cross Reference | Enquiries |
| Amended on 3 April 20083 April 2008, 7 July 20157 July 2015 and 8 October 20188 October 2018. | Rules 13.8.1–13.8.3 | Please contact Enforcement:— E-Mail Address: enforcement@sgx.com |
1 Introduction
1.1 Public confidence in a fair and orderly market, one that reflects the forces of genuine supply and demand, enhances its liquidity and efficiency. Improper conduct which gives a false or misleading impression of trading activity, price movements or market information leads to a reduction in market efficiency and confidence. SGX-ST seeks to ensure that its markets are fair and orderly and free of manipulative trading.
1.2 There are rules regulating trading activity in SGX-ST Rules and the Securities and Futures Act. Trading Members and Trading Representatives must ensure that their trading is conducted in accordance with SGX-ST Rules and the Securities and Futures Act.
2 Market Manipulation and False Market
2.1 Rule 13.8.1 says, A Trading Member or a Trading Representative must not engage in, or knowingly act with any other person in, any act or practice that will or is likely to:—
(1) create a false or misleading appearance of active trading in any securities or futures contracts; or
(2) lead to a false market in respect of any securities or futures contracts. For avoidance of doubt, a false market includes a market in which:—
(a) information is false, exaggerated or tendentious;
(b) contrived factors are in evidence, such as buyers and sellers acting in collaboration to bring about artificial market prices; or
(c) manipulative or fictitious orders, transactions or other devices have been employed.
2.2 In broad terms, market manipulation involves intentional interference with the free forces of supply and demand to deceive or defraud investors, or for some other ulterior purpose.
2.3 Rule 13.8.1 is concerned with the effect or likely effect of an order or a transaction, and involves an objective assessment of whether a false or misleading appearance, or false market, has been created. Whether an activity is "false or misleading" will depend on circumstances in each case. The Rule does not prevent Trading Members and Trading Representatives from carrying out legitimate trading strategies which reflect the forces of genuine supply and demand. However, Trading Members and Trading Representatives must do so bearing in mind their obligations to the market, and with an appropriate degree of care.
2.4 Although Trading Members and Trading Representatives must carry out their customers' instructions, a Trading Member or Trading Representative should not accept a customer's instructions blindly, but should exercise judgment in each case.
2.5 Naturally, some orders or transactions will have an impact on the market. They are not prohibited if there is a legitimate commercial rationale and the order or transaction is executed in a proper manner.
2.6 Rule 13.8.2 identifies the factors that Trading Members and Trading Representatives should take into account when considering the circumstances of an order or a transaction.
3 Guidance on Rule 13.8.2
3.1
3.1.1 Rule 13.8.2(1): Whether the Proposed Transaction Will be Inconsistent with the History of, or Recent Trading, in the Security or Futures Contract.
Trading Members and Trading Representatives would generally be familiar with the patterns of trading in each security or futures contract. They are therefore expected to exercise judgment, based on their experience and knowledge of trading in the security or futures contract, in assessing the likely impact of a proposed transaction on the market for a security or futures contract.
The Rule does not prevent a Trading Member or Trading Representative from executing an order simply because it will have an impact on the market for, or price of, a security or futures contract.
Trading Members and Trading Representatives would generally be familiar with the patterns of trading in each security or futures contract. They are therefore expected to exercise judgment, based on their experience and knowledge of trading in the security or futures contract, in assessing the likely impact of a proposed transaction on the market for a security or futures contract.
The Rule does not prevent a Trading Member or Trading Representative from executing an order simply because it will have an impact on the market for, or price of, a security or futures contract.
3.1.2 Rule 13.8.2(2): Whether the Proposed Transaction will or May Cause or Contribute to a Material Change in the Market for or the Price of the Security or Futures Contract, and Whether the Person Involved or Another Person with Whom the First Person is Collaborating May Directly or Indirectly Benefit From Alterations in the Market Place or Price
In the absence of a good reason to buy or sell quickly, customers generally want to obtain the best price. A Trading Member or Trading Representative who receives an order that would materially alter the market for, or price of, the security or futures contract, should consider whether it is genuine or manipulative.
Trading Members and Trading Representatives must also know their customers. Orders placed by a customer or a related party of that customer, who may have an interest in creating a material change in the market for, or price of, a particular security or futures contract, should be closely examined.
Examples
In the absence of a good reason to buy or sell quickly, customers generally want to obtain the best price. A Trading Member or Trading Representative who receives an order that would materially alter the market for, or price of, the security or futures contract, should consider whether it is genuine or manipulative.
Trading Members and Trading Representatives must also know their customers. Orders placed by a customer or a related party of that customer, who may have an interest in creating a material change in the market for, or price of, a particular security or futures contract, should be closely examined.
Examples
(1) Orders placed by a large holder of a particular security or futures contract who may have an interest in inflating the value of that holding (e.g. window dressing for investment performance purposes), or decreasing the price of the security or futures contract (e.g. as a precursor to a takeover bid or for purposes which include lowering a conversion price).
(2) Buying during the period of a rights issue by an underwriter, sub-underwriter or any other party which increases or maintains the price of the underlying security may include, as a purpose, inducing others to take up their rights entitlement under the issue.
3.1.3 Rule 13.8.2(3): Whether the Proposed Transaction Involves the Placing of Multiple Buy and Sell Orders at Various Prices Higher or Lower than the Market Price, or the Placing of Buy and Sell Orders Which Give the Appearance of Increased Volume.
A Trading Member or Trading Representative should not make large entries above or below the prevailing spread to facilitate filling an order on the other side of the market. The placing of buy (sell) orders at various price steps below (above) the market may create a false or misleading appearance that the entries are on behalf of genuine buyers (sellers). The layering of orders also translates into a change in the depth screen and may mislead market participants with respect to interest in the counter.
A Trading Member or Trading Representative should not make large entries above or below the prevailing spread to facilitate filling an order on the other side of the market. The placing of buy (sell) orders at various price steps below (above) the market may create a false or misleading appearance that the entries are on behalf of genuine buyers (sellers). The layering of orders also translates into a change in the depth screen and may mislead market participants with respect to interest in the counter.
3.1.4 Rule 13.8.2(4): Whether the Proposed Transaction will Coincide with or is Likely to Influence the Calculation of Reference Prices, Settlement Prices and Valuations.
A Trading Member or Trading Representative should consider carefully any orders placed with instructions to execute them at or near the close of trading, particularly if a price target is set. A Trading Member or Trading Representative should also be alert to orders placed near the close on the last trading day of the month, quarter or year, or on the expiry dates of options, warrants or futures contracts, which will move the price when executed.
A customer who, to the knowledge of the Trading Member or Trading Representative, declines the opportunity to obtain a better price during the day and prefers to pay a higher (lower) price near the close should be queried as to the strategy. This is important if the order is to buy or sell a small volume of the security or futures contract, which is likely to move the price and possibly fix the closing price. Further, if the Trading Member or Trading Representative received a series of similar orders over a number of days, each of which generates a price movement near the close of trading, the Trading Member or Trading Representative should be satisfied that the customer is not attempting to create a false or misleading appearance with respect to the price of the security or futures contract.
Examples
A Trading Member or Trading Representative should consider carefully any orders placed with instructions to execute them at or near the close of trading, particularly if a price target is set. A Trading Member or Trading Representative should also be alert to orders placed near the close on the last trading day of the month, quarter or year, or on the expiry dates of options, warrants or futures contracts, which will move the price when executed.
A customer who, to the knowledge of the Trading Member or Trading Representative, declines the opportunity to obtain a better price during the day and prefers to pay a higher (lower) price near the close should be queried as to the strategy. This is important if the order is to buy or sell a small volume of the security or futures contract, which is likely to move the price and possibly fix the closing price. Further, if the Trading Member or Trading Representative received a series of similar orders over a number of days, each of which generates a price movement near the close of trading, the Trading Member or Trading Representative should be satisfied that the customer is not attempting to create a false or misleading appearance with respect to the price of the security or futures contract.
Examples
(1) A fund manager's quarterly performance will improve if the valuation of his portfolio at the end of the quarter in question is higher. By placing a large order to buy relatively illiquid securities and/or futures contracts, which are also components of his portfolio, to be executed at or just before the close, his purpose might be to distort the price in his favour.
(2) The expiry of futures contracts may require a timed unwinding of the countervailing security position. In these circumstances, price impact in some securities may be inevitable, particularly in less liquid securities. However, a Trading Member or Trading Representative should be alert to a customer seeking to cause unnecessary price impact to improperly generate a profit or move the index.
3.1.5 Rule 13.8.2(5): Whether Parties Involved in the Proposed Transaction are Connected.
A concern here might arise if the security or futures contract is held in the name of a colluding party but the market risk actually remains with the seller. There may effectively be no change in beneficial interest.
A concern here might arise if the security or futures contract is held in the name of a colluding party but the market risk actually remains with the seller. There may effectively be no change in beneficial interest.
3.1.6 Rule 13.8.2(6): Whether the Buy and Sell Orders are to be Entered at About the Same Time, for About the Same Price and Quantity (Excluding Direct Business).
The time proximity of orders and the fact that they are for about the same price (particularly if the price is out-of-range) and quantity may suggest that the transaction is pre-arranged. Pre-arranged transactions have the effect of creating a misleading appearance of active trading, or improperly excluding other market participants from the transaction since the first bid or offer was not adequately exposed to the market. The execution of crossings or transactions between the same parties for the same volumes, which are subsequently reversed at the same prices, also raises questions whether the transactions involve a change in beneficial ownership, or are for rollover of trades to extend settlement, or for a purpose of engaging in a circular trading scheme to create the impression of turnover.
The time proximity of orders and the fact that they are for about the same price (particularly if the price is out-of-range) and quantity may suggest that the transaction is pre-arranged. Pre-arranged transactions have the effect of creating a misleading appearance of active trading, or improperly excluding other market participants from the transaction since the first bid or offer was not adequately exposed to the market. The execution of crossings or transactions between the same parties for the same volumes, which are subsequently reversed at the same prices, also raises questions whether the transactions involve a change in beneficial ownership, or are for rollover of trades to extend settlement, or for a purpose of engaging in a circular trading scheme to create the impression of turnover.
3.1.7 Rule 13.8.2(7): Whether the Proposed Transaction Will or May Cause the Price of the Security or Futures Contract to Increase or Decrease, but Following Which the Price is Likely to Immediately Return to About its Previous Level.
The key question in this area is whether there appears to be any logical trading pattern to the price and volume of the security or futures contract, or whether it seems erratic. Trading is manipulative if it is intended to move the price of the security or futures contract.
The key question in this area is whether there appears to be any logical trading pattern to the price and volume of the security or futures contract, or whether it seems erratic. Trading is manipulative if it is intended to move the price of the security or futures contract.
3.1.8 Rule 13.8.2(8): Whether a Proposed Bid (Offer) is Higher (Lower) than the Previous Bid (Offer) but is to be Removed from the Market Before it is Executed.
This could indicate that the order is not genuine, especially where a distinctive pattern of such orders is observed. At the time the bid (offer) was made, the Trading Member or Trading Representative did not intend to buy (sell), but intended that the bid (offer) would not trade and would be cancelled. Sometimes, such orders are entered to induce buyers (sellers) into the market to facilitate the filling of an order on the other side of the market.
This could indicate that the order is not genuine, especially where a distinctive pattern of such orders is observed. At the time the bid (offer) was made, the Trading Member or Trading Representative did not intend to buy (sell), but intended that the bid (offer) would not trade and would be cancelled. Sometimes, such orders are entered to induce buyers (sellers) into the market to facilitate the filling of an order on the other side of the market.
3.1.9 Rule 13.8.2(9): Whether the Volume or Size of the Proposed Transaction is Excessive Relative to Reasonable Expectations of the Depth and Liquidity of the Market at the Time.
This Rule does not restrict Trading Members and Trading Representatives trading significant volumes where there is a legitimate purpose for the transaction and where the transaction is executed in a proper manner. However, trading significant volumes with the purpose of controlling the price of a security or futures contract will amount to manipulative trading.
Example
A Trading Representative purchased substantial volume in a thinly traded counter, which accounted for a large proportion of the market volume, to establish a predetermined price. Sometimes, this may be followed by up-ticking the bid despite the absence of bona fide investor demand for the security or futures contract.
This Rule does not restrict Trading Members and Trading Representatives trading significant volumes where there is a legitimate purpose for the transaction and where the transaction is executed in a proper manner. However, trading significant volumes with the purpose of controlling the price of a security or futures contract will amount to manipulative trading.
Example
A Trading Representative purchased substantial volume in a thinly traded counter, which accounted for a large proportion of the market volume, to establish a predetermined price. Sometimes, this may be followed by up-ticking the bid despite the absence of bona fide investor demand for the security or futures contract.
3.1.10 Rule 13.8.2(10): Whether the Proposed Buy (Sell) Order is Likely to Trade with the Entire Best Offer (Bid) Volume and Part of the Offer (Bid) at the Next Price Level.
If a customer regularly buys (sells) on the up-tick (down-tick) in the face of consistent selling (buying) pressure, the Trading Member or Trading Representative should query whether the customer is a bona fide purchaser (seller). Repetitive orders to clear the best offer (bid) volume, particularly within a short time, suggest that the Trading Member or Trading Representative might be attempting to break the market. The trading spikes or troughs were meant to excite the market and attract spectators to join in.
If a customer regularly buys (sells) on the up-tick (down-tick) in the face of consistent selling (buying) pressure, the Trading Member or Trading Representative should query whether the customer is a bona fide purchaser (seller). Repetitive orders to clear the best offer (bid) volume, particularly within a short time, suggest that the Trading Member or Trading Representative might be attempting to break the market. The trading spikes or troughs were meant to excite the market and attract spectators to join in.
3.1.11 Rule 13.8.2(11): Whether the Proposed Buy (Sell) Order Forms Part of a Series of Orders that Successively and Consistently Increase (Decrease) the Price of the Security or Futures Contract.
If a customer places a sell order well above the best ask and one or more buy orders which would increase the price towards the customer's ask price, a Trading Member or Trading Representative should query the customer as to the strategy. It may be that the buy orders are intended to get the price running and facilitate the sale at the higher price. Illiquid securities or futures contracts, in particular, are susceptible to this type of improper trading.
If a customer places a sell order well above the best ask and one or more buy orders which would increase the price towards the customer's ask price, a Trading Member or Trading Representative should query the customer as to the strategy. It may be that the buy orders are intended to get the price running and facilitate the sale at the higher price. Illiquid securities or futures contracts, in particular, are susceptible to this type of improper trading.
3.1.12 Rule 13.8.2(12): Whether There Appears to be a Legitimate Commercial Reason for the Proposed Transaction.
Many orders for legitimate commercial reasons can change the market for, or price of, a security or futures contract when executed. Such orders are acceptable despite the price impact, but the Trading Member or Trading Representative must execute the order in an appropriate manner, bearing in mind its or his obligations.
Examples
Many orders for legitimate commercial reasons can change the market for, or price of, a security or futures contract when executed. Such orders are acceptable despite the price impact, but the Trading Member or Trading Representative must execute the order in an appropriate manner, bearing in mind its or his obligations.
Examples
(1) A Trading Member conducting index arbitrage as principal and entering orders in an illiquid security or futures contract may have a material impact on the price of some securities or futures contracts, even with small orders. Index arbitrage orders are a legitimate commercial reason for trading, but the Trading Member must exercise sufficient care to ensure that the order did not result in a false or misleading appearance with respect to the price of a security or futures contract.
(2) A Trading Representative accepting orders from a customer seeking to replicate an index at a time when one or more of the security or futures contract are being included or excluded from the relevant index, or when the size of the portfolio is being increased or decreased, should consider the impact the orders may have. If the Trading Representative attempts to execute a large proportion of the order during the Pre-Close phase, having ignored opportunities earlier in the day, and the order has a material impact on the closing price, it may result in allegations that the Trading Representative created a false or misleading appearance with respect to the price of that security or futures contract.
(3) A Trading Member or Trading Representative trading as principal to hedge an exposure should be alert to the impact its trading may have on the market for, or price of, a security or futures contract.
4 Guidance on SGX-ST Rule 13.8.3
4.1 Rule 13.8.3 says,
A Trading Member or a Trading Representative must not enter a buy order or a sell order on the Trading System if there is an existing opposite order from that same Trading Member or Trading Representative in the same security or futures contract for the same price. This Rule does not apply if:
A Trading Member or a Trading Representative must not enter a buy order or a sell order on the Trading System if there is an existing opposite order from that same Trading Member or Trading Representative in the same security or futures contract for the same price. This Rule does not apply if:
(1) the Trading Member or Trading Representative knows or ought reasonably knows that the orders are for different beneficial owners;
(2) the order is a type expressly permitted in a practice note published from time to time by SGX-ST as having a legitimate commercial reason and which is unlikely to create a false market; or
(3) the Trading Member or Trading Representative can otherwise establish that the purpose for which the order was made was not to create a false market.
4.2 Pursuant to Rule 13.8.3(2), orders entered under the following circumstances will be permitted:—
(1) orders from a fund manager whose instructions are intended to switch the security or futures contract from one sub-account to another for legitimate commercial reasons.
(2) orders from an affiliate overseas, acting on behalf of different beneficial owners, and the trades will be booked out eventually to these beneficial owners.
5 Conclusion
5.1 Manipulative trading may be inferred from circumstantial evidence, such as an unusual pattern of trading, coupled with a person's interest in affecting trading in the security or futures contract. Trading Members and Trading Representatives may not always know if a customer has a particular interest in a security or futures contract or what it may be. However, a Trading Member or Trading Representative needs to be able to show that, taking into account the circumstances of the order, it should not have reasonably suspected that the purpose of the trading was to create a false or misleading appearance, or false market. It is important that a Trading Member or Trading Representative who receives an unusual order is able to establish that it or he has made due enquiries and is satisfied as to the reason for the trading.
Amended on 25 October 201225 October 2012. and 8 October 20188 October 2018.
Practice Note 13.8.9 — Processes for Review of Orders and Trades
| Issue Date | Cross Reference | Enquiries |
| Added on 18 September 201218 September 2012 and amended on 1 July 20161 July 2016. | Rule 13.8.9 | Please contact Member Supervision: Facsimile No : 6538 8273 E-Mail Address: membersup@sgx.com |
1. Introduction
1.1 This Practice Note provides guidance on what Trading Members should do as part of their processes for post-execution review of orders and trades.
2. Guidance on processes
2.1 Trading Members should adopt processes to place suspicious orders and trades on exception reports or to trigger automated alerts for review. Exception reports and alerts should be reviewed by an independent party like a compliance officer or other appropriately qualified person on a regular basis to detect orders and trades or patterns of orders and trades which give rise to the possibility of non-compliance with the Rules and Regulations. The review process may involve further enquiry with Trading Representative and/or customers or reviewing other Trading Representative or customer-related information such as past trading activity.
2.2 Trading Members are expected to follow up on suspicious orders and trades and keep on file the result of their review process. Where it has been established that has been non-compliance with the Rules and Regulations, or if there is any doubt as to its compliance, apart from reporting such activity to SGX-ST pursuant to Rule 13.8.8, Trading Members are expected to take appropriate action, such as advising the Trading Representative or customer to refrain from such activity, performing a closer monitoring of the Trading Representative or customer and ultimately to close the account carried on the books of the Trading Member if the suspicious activity persists. Trading Members should note that the mere fact that an order has been placed on an exception report does not absolve them from their underlying compliance responsibilities.
3. Parameters to assist in detecting suspicious trading behaviour
3.1 The effectiveness of processes to identify suspicious trading behaviour depends to a large extent on the types and size of the parameters set. A list of suggested parameters is below:
(1) To detect orders/trades which are inconsistent with recent trading (not justified by assets, earnings, income yield or prospects) in the security or that which would materially alter the market, such as:
(a) orders/trades more than x% or a number of price steps from previous bid/ offer/last traded or closing price.
(b) several orders usually for small quantities placed close together at increasing or decreasing prices to create 'layering' of buy/sell orders in the market. Such orders may have a material impact on price but could potentially avoid detection by filters designed to pick up large one-time moves in price as the layering of orders results in many small price moves.
(c) the excessive use of forced keys in entering orders. This may be indicative of a Trading Representative and/or customer or a group of Trading Representatives and/or customers working to move the price far beyond the current price.
(d) orders entered during pre-opening and pre-close at such a quantity and price which have the effect of creating a false or misleading appearance of the market for, or the price of, such securities.
(2) Orders/trades which result in no change in beneficial ownership of a security that which create a false or misleading appearance of active trading, for example:
(a) orders/trades arising from orders placed on both the buy and sell side of the market at a similar price and time by the same Trading Representative or customer or by a group of Trading Representatives and/or customers acting in concert.
3.2 Trading Members' processes should be able to identify the above irregular orders/trades regardless of whether they originate from one Trading Representative or customer or a group of Trading Representatives and/or customers acting in concert. In addition, they should also be able to identify consistent patterns of irregular trades done over a period of time.
3.3 In setting the above parameters, Trading Members should take note of securities which are illiquid or those with small free floats which make them susceptible to cornering and price manipulation.
3.4 Trading Members should also pay attention to orders entered after a corporate action to ensure that the orders reflect the change in price and/or quantity after the corporate action. This is to prevent securities being traded at dramatically wrong prices/quantities due to a lack of knowledge or a misunderstanding of the corporate action by uninformed customers.
Added on 18 September 201218 September 2012 and amended on 1 July 20161 July 2016.