THE PHILIPPINE Stock Exchange (PSE) plans to revisit its standard operating procedures (SOP) in case of technical glitches in the market, heeding lessons from the disruptions during the most volatile trading days of August.
“While the event is technical in nature, the exchange recognizes that such trading disruptions need to be addressed with a holistic perspective. As such, the PSE will also review its relevant policies and procedures to identify ways to enhance its issue resolution protocols,” the PSE said in a statement.
Asked by the Securities and Exchange Commission to explain the disruptions in August, the PSE provided a public update on its preliminary findings on the events that caused the trading halts on Aug. 24 and 25, 2015.
“The PSE’s decision to halt the market was necessary and deemed in the best interest of the public to maintain a fair and orderly market. It was not imposed to stem the market’s drop. There were also no indications that the technical problem was in any way related to cyber security issues,” the bourse said.
Aug. 24 was the called “Black Monday” or the day when jitters over the Chinese economy—two weeks after the devaluation of the yuan—caused a global equities meltdown and dragged down the PSE index by 487.97 points or 6.7 percent to close at 6,791.01.
In terms of number of points, this was the biggest decline in a single day, resulting in a loss of P764 billion in market capitalization in a single day.
“The trading halt on Aug. 24 was imposed at 2:05 p.m. after the PSE front-end trading terminals were determined to be experiencing market data transmission issues. The immediate resolution made at that time, as recommended by the system provider, was to free up the load capacity in the servers. This was done by eliminating the inactive connections to the server and refreshing the market data information in preparation for the resumption of trading. The trading halt was lifted at 2:50 p.m.
Following the close of trading, additional virtual servers and dedicated market data servers were installed,” the PSE said.
But the trading halt that frustrated traders occurred on Aug. 25 or the day after Black Monday, because this had taken so many trading hours at a time that markets around the world were rebounding sharply. Investors who were hit by the previous day’s bloodbath were eager to reenter the market but could not do so because of the trading halt.
The PSE implemented the trading halt at 10:02 a.m. when the same trading terminals encountered similar data transmission problems.
The local bourse said it had subsequently installed and configured additional physical servers and loaded market data into the new servers. At 2:02 p.m., the PSE sent out log-in instructions to trading participants in preparation for the resumption of the market at 2:55 p.m. After close of trading, the PSE added physical servers and disabled the virtual servers.
Like what happened during Black Monday, the PSE lifted the trading halt only when the data transmission issue was addressed.
“The primary technical issue identified pertained to the transmission of market data to the PSE front-end trading terminals. A significant number of terminals, deployed to trading participants in both Ayala and Tektite trading floors as well as those that have offices offsite who have chosen to use this platform, were not receiving market information in a timely manner,” the PSE said.
“In both cases, the PSE observed the load capacity of the market data servers feeding to the front end trading terminals at full utilization. The number of messages being inputted in the servers spiked on both days given the heightened activity in the market,” it said. Doris Dumlao-Abadilla