Dealing Mechanics and Settlement Procedures

Dealing Mechanics and Settlement Procedures

1. 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

2. 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
   • 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

3. 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       • Orders can be entered , modified or withdrawn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.
   • 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
   • 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

4. 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
   • 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
   • 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

5. 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

6. 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

7. 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

8. 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