Singapore Exchange to lead pre-trade risk controls in Asia

The implementation of the pre-trade risk controls will take place on the third quarter of this year.

According to SGX, the risk controls will be used to strengthen the marketplace with increased opportunities for direct access to the exchange network.

Mr Gan Seow Ann, President of Singapore Exchange said, “As we embrace high speed trading and new technology to meet diverse needs of our global trading community, this initiative will strengthen our marketplace by enhancing the capability of our members and their customers to manage risk exposure more effectively. It will further promote direct access to the SGX trading platform, thereby widening our market reach and distribution.”

Customers of SGX Clearing Members currently connect their trading systems to their Clearing Member’s risk management systems for pre-trade risk checks. With SGX pre-trade risk controls, customers can now connect their order management systems directly to SGX’s trading engine. This will help customers reduce infrastructure development costs and speed up time-to-market. Clearing Members will work with their customers to set trading limits.

SGX will be the first exchange in Asia to offer such a service to the trading community. The Futures Industry Association, the industry representative for exchange-traded derivatives, welcomes this initiative. Mr Peter Johnson, Chairperson, FIA Market Access Working Group said, ”We commend SGX for taking a leadership role among Asia exchanges in offering pre-trade risk controls as outlined in the FIA Market Access Risk Management Recommendations.”

SGX continuously reviews its trading rules to cater to the diversity in market participants including algorithmic and high frequency traders.

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