MANILA, Philippines ? (UPDATE) Local stocks closed a bit lower ahead of President Benigno Aquino III's State of the Nation Address as investors stayed out of the market due to glitches caused by the new trading system that went live on Monday.
As of the market's close at 12:10 p.m., the main-share Philippine Stock Exchange index was down by 2.07 points or 0.06 percent to 3,414.03 on a thin value turnover.
Value turnout stood at only P1.6 billion compared to the normal daily volume of over P3 billion as chaos engulfed the market when trading glitches artificially inflated share prices. As of 9:43 a.m., it appeared that the main-share Philippine Stock Exchange was up by a whopping 472.12 points to 3,888.36 at a thin value turnout of P88.56 million.
This developed as the PSE rolled out its new trading system (NTS) to replace the legacy MakTrade system used since 1993.
Some traders went furious, alleging that PSE did not sufficiently prepare before having the live run. Many decided to stay out of the market to avoid being hit by "irrational" price movements.
"The prices don't reflect reality. They are a combined result of people panicking or taking advantage of the situation," one stock analyst said. "It's a disaster waiting to happen as many have complained about this beforehand."
"Investors were afraid to take position because they may make costly mistakes," a floor trader said.
As such, Monday's trading snafu had hit a lot of small stock brokerages, which were dependent on small trades, dealers said.
"Like any new technology system, the PSE's migration to NTS had its birth pains and glitches, which were deemed minor by the NTS Project Team. The NTS project has been a work in progress for the past two years in order to meet the demands of our trading participants and the investing public. We are proud that PSE can now compete with the best exchanges around the world," PSE chief operating officer Val Antonio B. Suarez said.
With the transition, the PSE also advised trading participants and the public to disregard a glitch in the index values and market statistics affecting market data feed, the electronic board and the PSE website. It said stock prices were not affected by the transition. As an interim solution, the PSE sent out selected updated values via the PSE website.
The PSE said the NTS application has been designed to trade a wide range of cash, debt and derivative instruments not currently possible through the current trading system.
"The new system is also expected to exponentially improve the capacity of the PSE to handle any future sharp increase in its value turnover," it said.
The NTS uses the NSC Trading System Core Products, the trading software product developed by NYSE Technologies SAS, the commercial technology unit of NYSE Euronext (NYX), which in turn operates the largest exchanges around the world including the New York Stock Exchange and Euronext.
