Singapore Exchange Limited (SGX) announces the regulations on error trade policy effective on 2 January 2009. The revised policy for the securities market seeks to enhance trade certainty, as well as timeliness and transparency in the resolution of error trades.
The key features of the revised policy are as follows:1) All error trades must be reported to SGX within 30 minutes of occurrence;
2) For error trades that Trading Members wish to have reviewed, Trading Members have to refer the error trades to SGX within 60 minutes of occurrence. SGX will only review error trades involving a trade loss of S$5,000 and above, for a review fee of $500; and
3) For error trades involving structured products, SGX will introduce a no-cancellation range, determined as the wider of:
i) +/- 20 minimum bid sizes from the pre-determined Reference Price The Reference Price will be determined as either:
a) the average of the last quoted bid price and the last quoted offer price for the structured warrant immediately preceding the error trade; or
b) the average of the market prices as quoted by at least three Designated Market-Makers (DMM) of structured warrants. The DMMs will be selected randomly by SGX, but will not include any DMM involved in the error trade under review. of the structured product; or
ii) +/- 25% of the Reference Price.
Structured products include structured warrants and certificates admitted for listing under Chapter 5 of the Singapore Exchange Securities Trading (SGX-ST) Listing Manual.