SGX introduces “trade at close” functionality from 3 June 2019

27 June 2019

With effect from 3 June 2019, Singapore Exchange Limited (“SGX”) introduced the “trade at close” (“TAC”) session for the securities market. The TAC is a new functionality whereby participants may, after an equilibrium price is determined at the end of the closing routine (“closing auction price”) for a security, enter orders to trade at that price. The functionality is introduced for both the ready and unit share markets of Singapore Exchange Securities Trading Limited (“SGX-ST”). It is not intended to extend the price discovery process. It is meant solely to allow participants to trade additional volume at each day’s closing price (represented by the day’s closing auction price), after that price has been determined. 

The TAC session occurs at 5.06pm to 5.16pm on a regular trading day and from 12.06pm to 12.16pm if the market is trading for half a day. 

For the purpose of corporate announcements after market close, issuers should note that the SGX-ST market closes at 5.16pm with effect from 3 June 2019.

Background

The launch of the TAC session follows supportive feedback during a public consultation conducted by SGX from 21 September 2018 to 11 October 2018. On 14 May 2019, SGX released its Response to feedback on the consultation paper titled “Proposed introduction of trade at close functionality for the SGX-ST market”. Key features of the TAC session are highlighted below.

Key features of the TAC session

  • Timing: The 10-minute-long TAC session immediately follows the closing auction routine and allows participants to execute orders at the closing auction price set during the closing auction routine. 
  • Availability: TAC is available for a security on a trading day only if there is a closing price established during the closing auction on that same day. Correspondingly, TAC is not applicable for a security if there is no closing auction price on that day (including Exchange Traded Funds (“ETFs”) which may have an alternative closing price). 
  • Matching of orders: Orders in the TAC phase comprise orders that have not been matched and have not expired by the end of the closing routine as well as new limit orders that are entered during the TAC phase. Orders that are carried over from the closing routine can match in the TAC phase only if they are at, or if a member amends them to, the closing auction price. New orders can be entered during the TAC phase only at the closing auction price. 
  • Invalidation of closing auction price: If SGX invalidates a closing auction price for a security, trades done during the relevant TAC phase based on that price will be cancelled. The situations under which SGX might invalidate a closing auction price are expected to be uncommon. They include where all closing auction trades are cancelled (for one of the reasons set out in the SGX-ST Rules, i.e. error, fraud or for financial integrity, reputation and interests of the market), and, in the case of ETFs, where SGX determines an alternate closing price. An alternate closing price may be determined in situations where, for example, the closing auction price is significantly different from the net asset value of the ETF.

Reference materials

The following materials are available on the SGX website www.sgx.com:

 

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