Bloomberg News

SGX: Derivatives Market Opening Delayed on Technical Issues

April 08, 2013

Singapore Exchange Says Derivatives Trading Resumes After Glitch

A logo is seen in the lobby of the SGX Centre which houses the Singapore Stock Exchange Ltd. in Singapore. Photographer: Munshi Ahmed/Bloomberg

Singapore Exchange Ltd. (SGX), the operator of Southeast Asia’s biggest stock market, said it resolved a technical glitch that delayed the trading of derivatives until 10:45 a.m. local time.

The Nikkei 225 futures fell as much as 0.2 percent to 13,180 in Osaka while trading was halted in Singapore. They rebounded to 13,240 in Osaka and 13,240 in Singapore. The exchange’s stock climbed 0.4 percent to S$7.73 as of 11:40 a.m. in Singapore trading.

“The derivatives trading market is now open for trading in all contracts,” the Singapore bourse said in a statement on its website. “We will continue to monitor the system closely.” Carolyn Lim, a spokeswoman for the exchange, declined to comment on the details of the malfunction.

Market disruptions due to technical issues have been in the spotlight since May 2010 when a broker’s algorithm set in motion events that briefly wiped $862 billion from U.S. stocks. In Asia, about $10 billion was temporarily added to the Australian benchmark stock index in October and two weeks earlier orders for Indian stocks improperly entered by a Mumbai brokerage sent the S&P CNF Nifty Index down 16 percent in eight seconds before it rebounded.

Singapore Exchange’s derivatives daily average volume rose 30 percent to a record 358,532 contracts in the second quarter ended Dec. 31, it said in a Jan. 22 statement. Derivatives revenue climbed 21 percent to S$45.7 million ($36.9 million) for the quarter, making up 28 percent of total sales, it said.

More Derivatives

Yuji Nakagawa, manager of derivatives trading at Toyo Securities Co. in Tokyo, said the delay may have contributed to a decline when contracts opened in Japan. “I get a feeling that Nikkei futures in Osaka started trading a bit lower than expected today because it didn’t have a catalyst with the contracts not trading in Singapore,” he said.

Singapore Exchange will increase revenue from derivatives 10 percent to 15 percent this year as it introduces more products linked to benchmark stock indexes in the region, President Muthukrishnan Ramaswami said last month.

The bourse plans to add equity-index futures on the Philippines and Thailand to offerings that include Nikkei 225 Stock Average and Indian contracts, he said. SGX is planning yuan and foreign-exchange futures, as well as commodities contracts as it seeks to become a trading hub, Ramaswami said in the interview.

SGX AsiaClear, the world’s largest clearer of iron-ore swaps, began a futures contract for the commodity yesterday.

To contact the reporters on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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