Singapore Exchange Ltd. will pay S$1 million ($743,000) into an education fund after two trading disruptions earned a reprimand from the city-state’s regulator and a bar on raising fees until fixes are cleared.

“There will be a moratorium on fee increases for the securities and derivatives markets with immediate effect until the improvements are completed,” the Monetary Authority of Singapore said on Wednesday after the exchange announced it will spend S$20 million to improve trading systems. “Following the discussion with MAS on the incidents, SGX has also decided to contribute S$1 million to its Investor Education Fund.”

The twin breakdowns in November and December marred the stewardship of Southeast Asia’s largest bourse by Chief Executive Officer Magnus Bocker, who’s stepping down next week to make way for Loh Boon Chye, formerly Bank of America Corp.’s head of Asia-Pacific global markets. Loh, who assumes his role July 14, faces the challenge of reviving stock-trading volumes, which have lagged Hong Kong’s. Bocker issued a public apology after the incidents, which disrupted trade for several hours.

“Financial institutions have the responsibility to ensure the resilience of their technological systems,” MAS Deputy Managing Director Ong Chong Tee said in a statement. “MAS takes a serious view of the incidents and will require SGX to improve its technology risk management.”

SGX shares climbed 1.3 percent to close at S$7.94 on Thursday, erasing a loss of as much as 0.6 percent. The company reported profit increased 16 percent to S$88.2 million in the quarter to March as revenue from derivatives jumped.

Fee Moratorium

While the SGX met an obligation to maintain orderly markets, it fell below service-recovery standards, the regulator said. Until the remedial measures are verified by an independent expert and the MAS is satisfied, SGX won’t raise fees, it said.

“There shouldn’t be a huge impact from the fee-increase moratorium,” said Bernard Aw, a strategist at IG Ltd. in Singapore. “While moves to beef up SGX’s IT infrastructure should help to minimize future disruptions and restore investor confidence in the market, SGX needs to address the bigger problem of low equities trading volume.”

Average daily turnover on the Singapore bourse was $864 million this year through Thursday, little changed from a year earlier, according to data compiled by Bloomberg. That compares with Hong Kong, where trading almost doubled to $16 billion.

More Complex

The Nov. 5 failure disrupted trade for 144 minutes and prompted the formation of a committee of inquiry. It was followed a month later by the second disruption as a software error caused the exchange to delay trade more than three hours.

Some of the world’s biggest exchanges suffered from disruptions last year, including Deutsche Boerse AG’s Xetra platform. As technology is getting more complex, it’s important for SGX to design systems that are as robust as possible, Quah Wee Ghee, head of the independent investigation committee into the failures, said at a briefing in Singapore on Wednesday.

“SGX has recognized the seriousness and severity of the incident,” Chairman Chew Choon Seng said. “We’ve taken measures to minimize such incidents from recurring. With the adoption of the committee’s recommendations, we are confident that SGX infrastructure will be more resilient.”

The exchange said November’s outage was caused by a faulty component at a backup-power supply equipment in a data center operated by a third party. It accepted responsibility for the disruption and pledged to strengthen technology systems.

“The disruption is very bad for the reputation of SGX as it struggles to revive stock-trading volumes,” said Ernest Lim, a trader at CIMB Group Holdings Bhd. in Singapore. “They should have robust backup systems to minimize future disruptions.

Stratech Group stock stages further rise (Biz Times Print Edition, 26 May 15)

SHARES in Stratech Group continued to climb on Monday, hitting a high of 4.9 Singapore cents in trading and making it the second most heavily traded stock by volume.

The counter closed at 4.5 Singapore cents, up 0.2 Singapore cent or 4.65 per cent, after some 89.33 million shares changing hands.

The stock has risen sharply in the last six weeks or so, gaining ground from 1.5 Singapore cents since April 7. On May 4, the Singapore Exchange queried the group after its shares jumped significantly in heavy trade, although Stratech responded by saying it was not aware of any undisclosed information that could explain the surge in its share price that day.

Stratech has been on the watch-list of the Singapore Exchange since June 2013 after racking up three years of consecutive losses.

Remisier Ernest Lim noted in a blog post last week that recent significant contract wins in Dubai and Hong Kong, as well as a positive industry outlook makes it an interesting stock to keep an eye on.

The technology group's iFerret airfield/runway surveillance and foreign object & debris (FOD) detection system is used by some airports as well as at a military air base.

Aviation safety is also increasingly coming under the spotlight in the wake of multiple high-profile aviation incidents last year.

In an earlier report this month, Phillip Securities Research noted the stock value could range up to 6.9 Singapore cents in a high-growth stage. However, analysts have also flagged other risks, such as its status on the Watch List and the fact that its turnaround ultimately hinges on its ability to successfully land new contracts from other airports.

Stratech Group, which has emerged as the newly listed entity following the restructuring of Stratech Systems, is seeking growth in overseas markets such as the US, executive chairman David Chew told BT in a recent interview.

This year, the firm has won a contract for its iFerret and FOD detection system at Hong Kong International Airport as well as a contract to upgrade the iFerret system at Changi Airport.

Hot stock: Stratech keeps climbing on active trading (Biz Times Breaking News, 25 May 15)

STRATECH Group on Monday rose half a cent or 11.6 per cent to S$0.048, on a volume of 56.6 million shares, making it the most active counter on the market.

The stock has been climbing steeply from S$0.015 in early April. Stratech is in the business of technology innovation for government and business clients, including the aerospace sector. Singapore's Changi Airport, for instance, uses its iFerret™ airfield/runway surveillance system.

Last Monday, remisier Ernest Lim said in a blog post: "Since April 10, 2015, Stratech has appreciated around 100 per cent from $0.016 to $0.032 today. Its recent share price performance has been spectacular.

"The recent significant contract wins (in Dubai and Hong Kong), coupled with the positive industry outlook, should make it an interesting stock to keep on the watch-list."

"Stratech's potential turnaround investment thesis revolves mainly around the success and acceptance of its iFerret (technology) by the airports," he said.Mr Lim had written the blog post after an exclusive meeting with David Chew, executive chairman of Stratech. In the blog post, he extolled Stratech systems' use of high resolution intelligent vision over other players which use radar technology that may interfere with the performance of other airport equipment.

That said, the company has been on the Singapore Exchange (SGX) watch-list since June 2013, after recording three straight years of net losses, but Mr Lim believes that "there is a chance that SGX may grant an extension to them pending their discussions with SGX".

Opinion on United Engineer (Lianhe Zaobao 17 Feb 2015)

Views on the Hong Kong Shanghai stock connect and A share (Lianhe Zaobao 27 Jan 2015)

Views on the market (Lianhe Zaobao 19 Jan 2015)

Link: http://www.bloomberg.com/news/2014-12-31/sgx-turns-to-individuals-as-trading-volume-sinks-southeast-asia.html

“So far, I’ve got a number of retail investors
opening new trading accounts, ahead of the reduction in board lot size,” Wong
said as he helped a new client fill out documents at the brokerage’s
headquarters in the central business district. “This would benefit retail
investors with smaller budgets.”

Views on the market (Lianhe Zaobao 1 Dec 2014)

Views on the market (Lianhe Zaobao 29 Sep 2014)

Views on quarterly reporting (Lianhe Zaobao 15 Sep 2014)

Views on the market (Lianhe Zaobao 8 Sep 2014)