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Dealing Mechanics and Settlement Procedures
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Dealing Mechanics and Settlement Procedures
Contracts
- Ready
- By 5pm on due date T+3
- Sellers paid on due date
- If payment not received on time shares may be sold
- Contra Trades
- Effect a corresponding sell contract on or before due date
- Investors pay the difference of all expenses
- Ready Basis only
- Immediate/Cash Trades
- Settlement on trade date by 5pm
- Cancelling Contracts
- Reasions
- Errror trade
- Material mistakes
- Evidence of fraud/wilful misrepresentation
- Protect finacial integrity/reputation/interests
- Reprimand/ imposed a fine not exceeding $2000
- Reasions
- Ready
Trade Settlement Changes
- Buy-In
- When selling customer fails to deliver
- buy-in will be instituted against the Clearing Member's customer (customer needs to cover position by 12pm on settlement date)
- CDP will conduct buy-in without prior notice
- 2 min-bids above yesterday's closing price
- 2 min-bids above any transacted/bid prices in an hour before the buy-in
- Costs of buy-in paid by the clearing member
- Selling customer will then face whatever differences there are, including expenses
- When selling customer fails to deliver
- Forced Sales
- Timetable inapplicable when:
- Expectation of full payment from customer and reasonably defer forced-sale for up to 2-4 days
- Trading member allowed the customer a sale position after purchase, but not later than the due date of the purchase contract.
- Rules
- 1. Trading member can adjust the price and volume for sale
- 2. Need not give notice of the forced-sale to customer
- 3. Trading member not liable for any losses to customer
- 4. Trading member can recover losses and expenses of the Forced-Sale from the customer
- When buyers fail to pay
- Trading member can sell off the shares that it has bought on behalf of its customers
- Timetable inapplicable when:
- Buy-In
Dealing Mechanics
- Opening Routine
- 30 mins pre-session
- Normal Trading starts at 9AM
- Pre-Open: 8:30 to 8:59 AM
- Non-Cancel: 8:59/8:59 - 9 AM
- Pre-Open
- Orders can be entered , modified or withdrawn
- No matching of orders
- End randomly at any time from 0858 to 0859
- Non-Cancel
- NO input, amendment and withdrawals
- Orders that can be matched are at a single price computed by the SGX-ST
- The computed price will be the opening price for the day
- Unmatched orders will be carrid forward into the morning session.
- 30 mins pre-session
- Trading Phase
- Morning Trading Phase: 0900 to 1200 Afternoon Trading Phase: 1300 to 1700 Half Day Trading Phase: 0900 to 1200
- Allows order entry, modification and withdrawal
- Orders are matched by price priority before time priority
- Unmatched Orders
- During morning: carried forward to Mid-Day Break
- During afternoon or half-day: carried forward to Closing routine
- Closing Routine
- 6 minute session
- Pre-closing: 1700 to 1704-1705 / 1200 to 1204-1205
- Non-cancel: 1704 -1705 to 1706
- Trading stops at 12pm/5pm
- 6 minute session
- Mid-Day Break
- 1 hr session that begins after morning phase and ends before afternoon phase (Both Pre-Open and Non-Cancel Phase)
- Non-Cancel
- No input, amendment or withdrawal of orders
- Orders that can be matched are at a single price computed by the SGX-ST
- The computed price will be the opening price for the day
- Unmatched orders will be carried forward to the afternoon trading session
- Pre-Open
- Orders can be entered, modified or withdrawn in ready and Unit Share Market
- No matching of orders
- Ends randomly from 1258 to 1259
- Opening Routine
Securities
- Securities Account
- Maintained with CDP or depository agent
- Settled in currency of quotation at FOREX rate set by TM
- Designated Securities
- Requirements
- Manipulation
- Excessive speculation
- SGX discretion
- Restrictions
- Prohibit short selling
- Designated securities exceed 5% of paid up margins are restricted by TM
- TM obtain margins from customers
- Compliance
- TM must give all particulars to SGX
- TM must inform SGX the next business day when asked
- Requirements
- Cornered Securities
- Requirements
- Single interest has enough control of supply and price
- SGX-ST declares to protect markets
- Restrictions
- Extend due date for delivery
- Cash settled
- Requirements
- Eligible Securities
- Securites that are eligible for clearance or settlement on a book-entry basis by CDP
- Trading Basis
- Cum
- Quoted with entitlements
- Ex
- Quoted without entitlements
- Cum
- Securities Account
Trading Safeguards
- Publication of real-time Indicative Equilibrium Prices (IEP) during opening and closing routines
- Provide more market transparency
- Facilitate Price Discovery
- Safeguard against manipulation of the equilibrium price
- Random ending to the Pre-Open and Pre-Close phase
- Publication of real-time Indicative Equilibrium Prices (IEP) during opening and closing routines
Direct Business
- Order is "married" with corresponding order from another client
- Conditions
- 50000 units of securities or $150000 in value
- Book out trade to remedy an error
- Complete order partially filled in market
- Parties
- 2 Trading Members
- 2 customers of a Trading Member
- Trading member and its customer
- Reporting
- Married trade reporting system
- Price/Quantity/Counterparty
- During trading hours
- within 10 mins of execution
- After trading hours
- first 20 mins of opening routine the next market day
- Married trade reporting system
Trading halt and suspension
- Halt
- may be imposed /lifted/changed to suspension anytime by SGX-ST
- allows issuer to disclose material information during the pause
- up to 3 market days or as agreed
- Minimum duration of 30 mins or as prescribed
- cease to be traded on SGX reach
- existing orders remain valid/new orders can be entered but unmatched
- can be requested by issuer
- Suspension
- all unmatched orders lapse
- reasons
- less than 10% in public hands
- assets substantially cash/short dated securities
- ability to continue is in doubt
- unwilling to comply to rules
- judical management
- application filed to court for liquidation & debt is alleged is significant
- necessary for fair/transparent/orderly market
- market sensitive announcement released
- imposed by SGT-ST
- Prolonged period
- Halt
Dealing with Errors
- Error Trades
- Wrong entry of volume of the order
- Wrong pricing entered during transaction
- Whatever SGX-ST deems to be an error
- Actions to take
- Contact other party to seek agreement to cancel trade
- trading members must inform SGX-ST through phone call within 30 mins and in writing (in detail)
- Trading member at fault must provide reasoning behind the action
- Disputes arising from errors
- Refer to SGX-ST quickly
- SGX-ST will decide whether or not to cancel the error trade, on the same day, considering:
- Price difference
- Securities market liquidity
- Time
- Force Key
- Monetary Loss
- Number of Counter Parties
- Reasons given for error
- Any other factor deemed relevant by SGX-ST
- Error Trades
Information
- Description
- Mind Map on Dealing Mechanics and Settlement Procedures, created by Lim Jia Ying on 13/11/2018.
- Created by
- Lim Jia Ying
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