SINGAPORE—Singapore Exchange Ltd. said Tuesday that last week's outage that caused trading to be halted for nearly a day was caused by a hardware failure that wasn't detected by its automated backup systems.

The exchange, better known as SGX, said a hardware disk that runs an application to send out clearing confirmation messages for completed trades had failed early Thursday. SGX's automated software didn't detect the disk failure and so secondary backup systems didn't kick in until activated manually.

Thursday's outage left brokers and traders confused and in some cases concerned for their investments. Some brokerages, which place orders on behalf of clients, said they had received multiple confirmation messages when they entered a trade and were unable to confirm whether orders had been successfully processed. In some cases confirmation messages weren't received at all or came at unexpected times.

After the problem with its systems was detected, SGX said it had worked with brokerages to reconcile trades, but this took longer than expected and it was forced to delay the market's reopening to Friday.

The stock market operator promised to improve its systems, reiterating its efforts to lift its image as one of Asia's most prominent stock markets.

"As a result of disk failure, some clearing confirmation messages were not generated," SGX said, adding that this resulted in duplicate or missing clearing confirmation messages, forcing the exchange to halt trading.

SGX, which is one of the most technically advanced stock exchanges in the region, has had its reputation hurt by outages. Thursday's glitch was the fourth such incident in two years. The exchange, under its new chief executive, Loh Boon Chye, is trying to build SGX's reputation as a sought-after destination for foreign listings and as a derivatives trading hub for the region.

The complex nature of exchange infrastructure can magnify the effects of even a small technical error, such as a power surge or glitch in a backup system. Last year, for example, a faulty software upgrade caused a nearly four-hour outage at the New York Stock Exchange. In 2008, at the height of the global financial crisis, a system failure at the London Stock Exchange cut off investors for more than seven hours.

SGX said that it has contacted its hardware and software vendors Hewlett-Packard Co. and Nasdaq Inc. to conduct an investigation into the problems, and has replaced faulty hardware. It also promised to improve planning scenarios for trading disruptions and has submitted a preliminary incident report to its own regulator, the Monetary Authority of Singapore.

On Monday, the stock exchange said that it will transfer its self-regulatory functions to a separate subsidiary company as part of its efforts to build on its credibility and tackle criticisms of its dual role as a profit-seeking company and market regulator.

Write to Jake Maxwell Watts at jake.watts@wsj.com

 

(END) Dow Jones Newswires

July 19, 2016 02:05 ET (06:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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