Singapore Exchange issued a consultation paper seeking public feedback for a permanent penalty framework for failed share delivery.
This follows the implementation of measures by SGX in September this year to deter settlement failures of securities and abusive naked short-selling.
To reinforce the gravity of how failed share delivery threatens the orderliness of the securities market, SGX proposes for the penalties to be cumulative in nature1. The imposed penalty amount will begin with the initial amount of $1,000 or 5% of the value of the trade (whichever is higher) on all trades that are not delivered. The penalty amount will progressively build up for persistent non-delivery of securities.
The proposed penalty framework is established to protect the integrity of the securities settlement system and minimise exposure of settlement risks to CDP.
jt