SGX Issues Public Consultation On Revised Settlement Processes To Manage Non-Delivery Of Securities

Singapore Exchange Limited (“SGX”) is proposing to revise the Central Depository’s (“CDP”) settlement processes to further reduce failure to deliver shares due for settlement in the securities market. These changes form part of the overall review of measures to mitigate settlement risk, which includes the earlier consultation on changes to the penalty framework that was issued on 13 November 2008. The proposed changes to the settlement processes will help to minimise counterparty exposure and protect the integrity of the CDP. In addition, the incidence of non-delivery of securities and associated penalties are expected to reduce significantly at the buying-in on T+3.

SGX is committed to protect the interests of market participants by strengthening the risk management framework of the marketplace. The proposed changes are primarily:-

a. Commence buying-in of undelivered securities on T+3 at 1500 hrs (3.00pm)

• The deadline for the delivery of securities will be harmonised for retail and institution trades. Participants must ensure that they have sufficient securities in their securities accounts to meet their delivery obligations on T+3 at 1200 hrs (12.00pm). CDP will then identify those sellers that do not have the requisite securities.

• SGX proposes to publish the list of securities required in the buying-in market on the SGX website by 1430 hrs (2.30pm) and commence buying-in of these undelivered securities on T+3 at 1500 hrs. This buying-in session will allow open positions identified at 1200 hrs to be covered before the trade is deemed to have failed at the end of T+3. Withdrawal from the buying-in market will not be allowed on T+3.

• Penalties will not be imposed on the open positions that have been covered from the T+3 “buying-in”.

• Buying-in will continue on T+4 and T+5 from 1500 hrs to 1700 hrs (3.00pm to 5.00pm) for outstanding undelivered securities after the previous market day’s settlement run. The timing of buying-in is changed from the current practice under which buying-in starts at 1130 hrs (11.30a.m.).

b. Revise Inter-Broker Money Settlement between CDP and Clearing Member

The CDP will make payment to broking houses (“Inter-Broker Money Settlement”) for securities that are confirmed for delivery at the deadline of 1200 hrs on T+3. The funds will be transferred at 1500 hrs to 1600 hrs (3.00pm to 4.00pm), as per present practice. For securities not available for confirmation at 1200 hrs, the CDP will withhold the payment till the shares are delivered.

The consultation paper and proposed amendments to the CDP Clearing Rules and SGXSecurities Trading (SGX-ST) Rules are available on www.sgx.com from 11 March 2009 to 31 March 2009.

Market participants and members of the public are encouraged to participate in this public consultation. All feedback and suggestions for the proposed amendments should reach us by 31 March 2009 via email and either by post/courier or fax:-

Consultation Paper