PSE to introduce direct market access to investors

MANILA, Philippines—The Philippine Stock Exchange will make it easier for investors to cast their stock trade orders by opening up direct market access (DMA) in the local bourse, in line with the general practice across the region.

DMA is an arrangement whereby a trading participant’s client is permitted to enter orders to buy or sell securities directly into the PSE trading system—or PSEtrade—for queuing and matching without any manual intervention by the broker.

“We hope the introduction of DMA in the Philippine stock market through our trading participants will significantly boost volumes through faster execution of trades. DMA is being offered in various markets such as Malaysia, Singapore and Hong Kong. The introduction of DMA should also complement our efforts to promote online trading, thus giving investors in the local stock market several options and channels by which to participate in the growth of Philippine-listed firms,” PSE president Hans Sicat said in a press statement on Wednesday.

To govern this activity, the PSE has proposed rules to provide the regulatory framework for the provision by trading participants of DMA services. Types of DMA services include automatic order routing (AOR) and sponsored access. Some trading participants currently offer online trading, which is a form of DMA service.

AOR is a type of DMA service wherein a trading participant permits its clients to send orders electronically to the trading participant’s infrastructure, which in turn automatically sends the order to the PSEtrade. The two types of AOR are Internet trading and straight through processing (STP).

Internet trading DMA is available for clients using a web-based trading application provided by the trading participant. STP, on the other hand, is available to a client if it uses an order execution system whether provided by the trading participant or a third-party service provider that is directly connected to the trading participant’s infrastructure.

Another type of DMA service is sponsored access, which is when a trading participant permits a client to transmit orders for execution directly to the PSEtrade without passing through the trading participant’s infrastructure.

The proposed rules seek to lay down certain requirements that trading participants and clients must comply with in order to address potential risks associated with DMA trading.

All concerned parties may send their comments to the proposed rules posted on www.pse.com.ph not later than 5 p.m. of September 7.