Singapore Exchange (SGX) announced a temporary ceasing of trading at 11:38 a.m. yesterday. Unfortunately, after two other later announcements, the market stayed closed for the rest of the day. This morning, it announced that market will resume trading as per normal for today. The reason cited for yesterday’s closure was a technology issue affecting its trade confirmation processes.

In 4Q14, SGX also experienced two trading disruptions in Nov and Dec, leading to a reprimand from the Monetary Authority of Singapore (MAS). Meanwhile, MAS said that it is monitoring this current situation closely.

The trading disruption also affected the trading of Noble’s rights, and the company announced that trading will be extended to 5pm today (Fri 15 July). This latest trading halt does not reflect well on the exchange, especially since its aspiration is to be a multi-asset exchange.

Based on the previous incident, it took the MAS about 6-7 months before it issued the reprimand on SGX, and it could take about the same amount of time before the MAS issues its official statement on the current incident.

The financial impact is likely to be minimal at this juncture, but internal steps need to be taken to ensure that this does not happen again and will involve more costs and investments.

For now, we maintain our HOLD rating and our fair value estimate of S$7.40. The previous closing price was S$7.79.

Source: OCBC Research - 15 Jul 2016