Singapore Exchange (SGX) has said it will introduce circuit breakers in the securities market from 24 February 2014.
The circuit breakers will apply to the Straits Times index and MSCI Singapore index component stocks and all those securities priced S$0.50 and above. The rule will include stapled securities, funds, exchange traded funds, exchange traded notes and extended settlement contracts.
The securities covered by the new circuit breakers will account for about 80% of current trading on the Singapore stock market.
The circuit breakers will be triggered when a potential trade is matched at a price that is over 10% away from the reference price (the last traded price), that has taken place at least five minutes earlier.
Once a circuit breaker is triggered, a five-minute cooling-off period will follow whereby trading can only take place within a price band 10% above or below the reference price. After that, trading can resume with a new reference price established during the cooling-off period.
SGX has said it will also revise its error trade policy from 24 February. For all securities except bonds, trades will not be cancelled if a transacted price falls within a price range of twenty minimum bid sizes, or 5%, from the last traded price. Trades done outside of the relevant price range will be eligible for review by SGX.
In SGX’s second quarter results, announced this week, the exchange said that it has extended its product suite to a new asset class, foreign exchange. SGX has launched futures contracts for the Australian dollar, Indian rupee, Japanese yen, Korean won, Singapore dollar and US dollar.
SGX also said that it has been independently assessed by the International Monetary Fund as being compliant with the latest international standards for clearing and settlement. In addition, SGX was the first Asian clearing house authorised as a derivatives clearing organization by US regulators.