SGX's latest system glitch: tame reaction a real worry
The most worrying aspect of Thursday's stock market
disruption is not that it lasted for as long as it did but that it was met with
a relatively tame and subdued response from the investing public.
Comments
R Sivanithy
16 July 2016
The most worrying aspect of Thursday's stock market disruption is not that it lasted for as long as it did but that it was met with a relatively tame and subdued response from the investing public.
Instead of the shrill, public clamour for blood that accompanied past system breakdowns at the Singapore Exchange (SGX), this time the reaction was much more muted and hinted at a weary and worrying acceptance of a status quo in which regular system disruptions should be tolerated as part of normal market life.
"We could have gone home much earlier" was perhaps the tamest comment this writer received from a dealer. Others wondered about naked short positions they and their clients had taken, and yet others saw the funny side of things with responses such as "SGX must have bought the system from China because of its cracks", referring to the much-publicised cracks in China-made trains bought by rail operator SMRT.
There was even an effort to downplay the significance of the half-day outage, with some observers noting that if orders couldn't be matched, the responsible thing to do was to shut down trading - as was the case on Thursday. Inevitably, there also was an observation that all exchanges encounter technical problems, so SGX is not unique in that regard.
Granted, there was some anger; Singapore Remisiers' Society president Jimmy Ho correctly pointed out that the breakdown was "unacceptable", while others spoke cynically of SGX's goal of being a major Asian gateway taking a hit. And some brought up the issue of compensation for loss of income. Overall, though, the tone was much less vocal than during past system outages.
The contrast between the reactions to Thursday's incident and the one that preceded it could not be greater. When the trading system went on the blink in December 2014 for several hours, it drew tremendous flak from all quarters - coming as it did just a month after another breakdown, that one lasting three hours.
Recall that around that time, an online petition had circulated asking for then-SGX chief executive officer Magnus Bocker to resign - one that was rooted in frustration, anger and unhappiness among trading representatives (TRs) that had built up over several years over what they perceived as poor conditions in the equity market and a disregard for their welfare.
So when the trading system broke down twice in a month, the response was understandably overwhelmingly critical (and, in many cases, downright abusive). Even though the petition to remove Mr Bocker eventually fizzled out from lack of support, some of its substance was revived a few weeks later in early 2015 when another appeal surfaced - this time addressed to the finance minister and signed by 1,225 TRs. It was titled "Urgent Measures Needed to Rebuild Confidence in the Singapore Stock Market".
As the title implied, TRs believed that confidence in the local market had deteriorated so badly that government intervention was desperately needed to fix things.
This time, even with another confidence-shattering system glitch that led to the longest trading suspension ever encountered in the local market, nothing similar has arisen. There is a simmering sense of outrage but mixed with it seems to be a quiet acceptance by a punch- drunk community that, after several blows, it would be pointless to make too much noise - because nothing will change and that, despite all the talk about achieving first-class standards, mediocrity is perhaps the best that can be hoped for.
Which, when you think about it, is a real worry - perhaps even more than if everyone had been up in arms and dozens of petitions had circulated.