Singapore Exchange Limited ("SGX") clarifies that the recent measures for failed share delivery are introduced to deter settlement failure and to maintain the integrity of the securities settlement process.
As stated in SGX’s Clearing Directive that was issued on 22 September 2008, the measures are:-
(a) A penalty of 5% of the value of the failed trade, subject to a minimum of S$1,000, will be imposed on trades that fail to deliver on T+3 settlement in the ready market. This is in addition to the current processing fee of S$30 per contract imposed on all failed trades. Processing fee and penalties will be imposed regardless of withdrawals from Buying-In on T+4.
(b) Participants who fail to deliver shares in the Buying-in market may be liable to a penalty of S$50,000 and/or disbarment from participating in the buying-in market. This is in addition to the penalty of 5% of the value of the failed trade, subject to a minimum of S$1,000.
Furthermore, there are provisions for appeal under the existing regulatory framework which will also apply in this case. For penalties imposed against any market participants who fail to deliver securities by the settlement date, participants may lodge an appeal to SGX via the existing Appeal Process for a waiver of these penalties.
The broking firm, on behalf of the market participant, will submit the appeal to the Exchange. SGX will assess each individual appeal, taking into account relevant factors including the intent behind the trade, profile of trade/traders, as well as the impact of the trade on the integrity of the settlement process. (*Please refer to the appendix attached for procedure of Appeals against Penalty.)