Dealing Mechanics & Settlement Procedures

Dealing Mechanics & Settlement Procedures

1. Trading Safeguards

   • Publication of real-time Indicative Equilibrium Prices (IEP) during Opening & Closing routines
     • Provide more market transparency.
     • Safeguard against manipulation of the eventual equilibrium price.
     • Random ending to the Pre-Open and Pre-Close phases of the Opening and Closing Routines.
     • Facilitate orderly price discovery during market opening and closing

2. Contracts

   • Ready Contracts
     • T+3 Settlement by 5pm
     • Only on business days
     • Sellers paid on due date
     • Shares may be disposed by broker if buyer does not pay on time
   • Contra Trades
     • Buying and selling a security without paying
       • On or before due date for delivery
       • Ready-basis only
       • Investors pays difference after less expenses from settlement price
   • Immediate/Cash Trades
     • Settlement on trade date by 5pm
   • Cancellation of contracts
     • Cancelled if:
       • TM of error trade agreed
       • Error due to material mistake
       • Evidence of fraud or willful misrepresentation
       • Desirable to cancel in SGX-ST opinion
     • Not considered cancelled if:
       • Delivery fails
       • Payment is not made
       • Share registrar refuses to register transfer
     • May be reprimanded or fined not >$2000 by SGX-ST. Other actions can be taken.

3. Dealing Mechanics

   • Opening Routine
     • 30-minutes before 0900
       • Pre-Open: 0830 to 0858-0859
       • Non-Cancel: 0858-0859 to 0900
     • Pre-Open phase
       • Orders can be entered, modified or withdrawn
       • No matching of orders
       • Randomised ending
     • Non-Cancel phase
       • Starts simultaneously after Pre-Open phase
       • No input, amendment or withdrawal of orders
       • Orders are matched at a single price
       • Unmatched orders are brought forward
   • Trading Phase
     • Allow entry, modification and withdrawals of orders
       • Prioritises time than price
     • Unmatched orders carried forward
       • Half-days carried forward to closing routine
     • Morning from 0900 to 1200; Afternoon from 1300 to 1700
   • Mid-day Break
     • 60-minute
       • Begin at 12pm, ends at 1pm
       • Consists of Pre-Open and Non-Cancel Phase (refer opening routine)
     • Allow trading representatives to better engage clients. Additional time to digest company announcements made during the lunch break.
   • Closing Routine
     • 6-minute ordeal
       • Pre-Close: 1700 to 1704-1705 / 1200 to 1204-1205
       • Non-Cancel: 1704-1705 to 1706 / 1204-1205 to 1206
     • Consists of Pre-Close and Non-Cancel Phase
     • Trading stops at 5pm/12pm

4. Trade Settlement Changes

   • Buy-In
     • Selling customer fails to deliver
       • By 12pm on settlement date (T+3)
     • CDP conducts buy-in without prior notice
       • Priced at least 2 min bids above yesterday's closing price;
       • or bid prices in the hour before buy-in takes place, whichever higher.
     • Cost of buy-in paid by clearing member first
       • Selling customer will then be charged the difference
   • Forced Sales
     • Buyer fails to pay
       • Trading member can sell of the shares that was bought on behalf of its customer
       • Rules to apply
         • Trading Member has discretion to the price and volume put up for sale at any time.
         • Trading Member need not give notice of the forced-sale to the buying customer.
         • Trading Member is not liable to the buying customer for any loss from the forced-sale .
         • Trading Member may recover the losses and expenses incurred in the forced-sale from the buying customer.
     • Not applicable when
       • Expectation of full payment from buying customer in reasonable time; defer for 2-4 market days
       • Buying customer allowed sale position after purchase, but not past the purchase contract's due date.

5. Trading Halts & Suspensions

   • Trading Halt
     • Request by issuer
     • Existing orders remain valid
     • Can be entered but unmatched
       • Cannot be traded on SGX Reach unless permitted
     • Lapse if not lifted at end of day
     • Period: 30 mins to 3 market days
       • Operates like Pre-opening phase
   • Suspension
     • Imposed by SGX-ST
     • Unmatched orders lapse
     • Trading may be suspended if:
       • <10% held in public (float)
       • Issuers assets mostly cash and short term securities
       • Issuer going-concern ability is doubted
       • Issuer is non-compliance with listing rule(s)
       • Issuer faces legal battles
       • Issuer files for bankruptcy
     • Prolonged period

6. Securities 101

   • Eligible Securities
     • Eligible for clearance by CDP
     • Almost all securities
   • Trading basis
     • 'Cum' basis
       • Quoted with entitlements
     • 'Ex' basis
       • Quoted without entitlement
   • Securities account
     • Maintained with CDP
       • Or with depository agent
     • Settled in currency of quotation
   • Designated Securities
     • Manipulated or excessively speculated
     • Deemed desirable to declare by SGX-ST
     • Trading Restrictions
       • Obtain margins from customers
       • Restricted trading if exceed 5% of paid-up capital of designated co.
       • No short-selling
     • Compliance matters
       • TM must give particulars to SGX-ST
       • TM must inform SGX-ST next day
   • Cornered Securities
     • A single entity has control over supply and price
     • Declared to protect markets
     • Trading Restrictions
       • Extended delivery due date
       • Cash settled

7. Direct Business

   • Trade settled outside of market.
   • Conditions
     • At least 50,000 unit of securities, or $150,000 in value
     • Book-out trade to remedy error
     • Completely partially-filled orders
   • Parties Involved
     • 2 Trading Members
     • 2 Customers of TM
     • TM and its customer
   • Reporting
     • Report price, quantity and counterparty
       • Through the married trade reporting system
     • Within 10 minutes of execution during trading hours
     • If after trading hours
       • Within 20 minutes of Opening Routine on the following market day

8. Dealing with errors

   • What are error trades?
     • Wrong entry of the volume of an order.
     • Wrongly entered price
     • If SGX-ST deems it to be such.
   • What do do?
     • Trading Member must immediately contact its counter party to seek agreement to cancel trade.
     • Both TM must inform SGX-ST of the error through telephone (30min) and in writing on the same day (with details).
       • TM in the wrong must provide reasons for it.
   • For disputes arising from errors
     • Refer to SGX-ST promptly
     • SGX-ST will decide whether to cancel the error trade. (Same day the error trade occur)
       • Factors to consider:
         • Price difference
         • Security market liquidity
         • Monetary loss
         • Time
         • Number of counter party
         • Force key
         • Reasons given for error
         • Any other factors which SGX-ST thinks relevant

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