7 Handling Market Disruptions
A disruption changes the available infrastructure, not the standard of conduct. The response is coordinated communication, documented alternatives and adherence to contract, regulator and market guidance.
7.1 Introduction
Section titled “7.1 Introduction”Market disruptions can affect prices, communications, payments, fixing, clearing and settlement. The response should preserve fairness, communicate clearly and follow agreed contingency arrangements.
7.2 General Description
Section titled “7.2 General Description”A disruption may be caused by systems, infrastructure, liquidity, public events, holidays or other external conditions. The response depends on the affected function, product and contractual fallback.
7.3 Role of SFEMC
Section titled “7.3 Role of SFEMC”SFEMC can convene members, discuss proposals with regulators and relevant participants, issue statements and make recommendations on market procedures. It does not replace a participant’s legal or contractual duties.
7.4 Communication During Disruptions
Section titled “7.4 Communication During Disruptions”Maintain effective, reliable and documented communication with counterparties, customers, settlement agents, regulators and relevant internal functions. Use approved alternative channels when normal systems fail.
7.5 Ethics/Conduct During Disruptions
Section titled “7.5 Ethics/Conduct During Disruptions”Stress does not suspend conduct rules. Do not exploit scarce liquidity, mislead counterparties, withhold information unfairly, fabricate prices or use a disruption to conceal a breach.
7.6 Settlement During Disruptions
Section titled “7.6 Settlement During Disruptions”Settlement should follow the agreed confirmation and documented fallback. Parties should coordinate rather than make unilateral suspensions that create additional exposures.
7.6.1 Alternative Settlement Procedures
Section titled “7.6.1 Alternative Settlement Procedures”Alternative settlement may use approved channels, adjusted timing, substitute systems or other documented procedures under the contract or market recommendation. Record the reason, approval and new terms.
7.6.2 Avoid Unilateral Suspensions
Section titled “7.6.2 Avoid Unilateral Suspensions”A participant should not stop payments or settlement unilaterally unless authorised by the applicable agreement, law or competent authority. Coordination limits contagion and disputes.
7.6.3 SGD Settlement Disruptions
Section titled “7.6.3 SGD Settlement Disruptions”For SGD disruption, follow relevant MAS and SFEMC instructions or recommendations and the agreed settlement terms. Escalate uncertainty instead of choosing a unilateral workaround.
7.7 CCP Rules
Section titled “7.7 CCP Rules”Where a central counterparty is involved, its rulebook governs margin, default management, settlement and emergency powers. Participants must understand and follow those rules during a disruption.
Exam cues
Section titled “Exam cues”- SFEMC can convene members, make recommendations and coordinate the market — it does not replace a participant’s legal or contractual duties.
- Conduct does not lapse in a disruption: do not exploit scarce liquidity, mislead counterparties, fabricate prices or hide a breach.
- No unilateral suspensions: stop payments/settlement only where the agreement, law or a competent authority authorises it.
- SGD disruption: follow MAS and SFEMC instructions and the agreed settlement terms.
- CCP: its rulebook governs margin, default management, settlement and emergency powers.
- Trap: a disruption does not automatically entitle a party to suspend payment unilaterally.