The Singapore Exchange (SGX) has introduced a set of measures intended to improve its securities market opening and closing routines through improved transparency and trading safeguards.
The exchange has started publishing real-time indicative equilibrium prices (IEPs) during the opening and closing routines. SGX has also introduced random endings to the pre-open and pre-close phases of the opening and closing routines. Gan Seow Ann, president of SGX, said the changes were intended to provide increased transparency, improved functionality, greater capacity and improved latency.
The IEP is the price at which orders would be executed if auction matching were to occur at that point. SGX publishes the IEP on a real-time basis and masks all prices and quantities better than the IEP – a measure intended as a safeguard against manipulation of the eventual equilibrium price. The publication of the IEP is intended to improve market transparency, since it acts as an indication of the eventual opening or closing price, which helps market participants assess the market.
The introducing of random endings for the opening and closing regimes will be done within a one-minute period. The randomised ending is intended as a safeguard against attempts to manipulate the opening and closing prices, especially via the sudden entry and withdrawal of large orders.
The exchange is also promising to offer new order types from 26 September 2011, allowing investors more flexibility in the execution of their orders. The new order types are ”Market on Open and Market on Close', Market-to-limit and ”Session State Orders'. The new order types allow traders to exit all positions at the end of the trading day and set the session state in which their orders are to be triggered, for example pre-open or open, respectively.
SGX launched its new trading engine, ”Reach', last month, which it claims is the world's fastest. SGX is currently pursuing a number of measures to compete with other exchanges in the region, such as Hong Kong Exchanges and Clearing, which has its own designs for dominance in the Asia Pacific region.