The Monetary Authority of Singapore (MAS) has reprimanded the Singapore Exchange for the market disruption on 5 November and 3 December 2014, and directed the exchange to strengthen its recovery capabilities.
In a press release dated 24 June 2015, SGX said it fully accepts responsibility for those incidents and will invest S$20 million to improve its technology infrastructure to improve the robustness of its systems and recovery processes.
The exchange will also implement a moratorium on fee increases for securities and derivatives market with immediate effect until it has improved its recovery capabilities and processes.
Besides that, SGX will contribute S$1 million to the Investor Education Fund, which is used to fund educational programmes approved by the Investor Education Committee.
On 5 November last year, the SGX faced market disruption for three hours due to a power outage. Investigations by the Board Committee of Inquiry (BCOI) found that the outage was triggered by a voltage sag in both power lines to the SGX Primary Data Centre (PDC). This was caused by a combination of a faulty component in the emergency backup power supply generator and the inability of downstream switches to cope with the malfunction.
"The BCOI's expert noted there was a gap in a specific part of the power infrastructure that did not allow the data centre to cope with the particular scenario that occurred that day. This is despite the generally robust overall design of the PDC and how it met industry resilience standards and best practices," said SGX.
A month after that incident, SGX delayed the opening of its securities market from 9am to 12.30pm due to a software defect that caused errors in reports generated by SGX's client accounting system.
Although MAS acknowledged that SGX has taken remedial action to address causes of the power outage, it has directed SGX to improve its monitoring system capabilities, strengthen its management and recovery procedures, and improve its crisis communications processes to provide prompt information to stakeholders.
"Financial institutions have the responsibility to ensure the resilience of their technological systems," said Ong Chong Tee, MAS' deputy managing director for Financial Supervision. "They should effectively manage their technology risks and ensure prompt recovery when incidents arise so as to minimise service disruption to customers."
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