Ramon Monzon, president of the Philippine Stock Exchange (PSE), apologized on Tuesday after a widely used trading platform encountered “technical problems,” sidelining stockbrokers and frustrating investors before forcing the bourse to cancel trading for the entire session.
Monzon told the Inquirer that over a third of trading participants, or 43 stock brokerage houses, using the trading platform known as Flextrade could not establish a connection to the core Nasdaq trading engine.
According to the PSE’s rules, the bourse has the option to halt trading if at least one third of brokers cannot access the trading system. There are currently 125 active trading participants with the PSE.
Monzon said on Tuesday morning that technical teams from Flextrade and Nasdaq were “troubleshooting their respective systems.” The PSE delayed the market’s opening at 9:30 a.m. and announced, past 1 p.m., that trading on Tuesday was canceled, hours before the 3 p.m. close.
“We are sorry about this unfortunate incident and we are exerting all efforts to resolve the problem,” Monzon said in the PSE advisory.
Monzon said Tuesday evening that trading will resume today, Jan.5.
Flextrade is one of several frontend systems used by brokers and their clients to execute transactions.
Another popular system is Technistock while some brokers such as COL Financial Group and Philstocks Financial decided to develop their own proprietary systems.
Investor protection
Joseph Roxas, veteran stockbroker and president of Eagle Equities Inc., said Flextrade was the system “contracted” by the PSE as a frontend option for trading participants.
He said the rule to halt trading when a large number of brokers cannot access the system was meant to protect investors.
“This is to ensure liquidity since the public won’t have the benefit of the full market breadth,” he said.
Roxas said the PSE may also need to revisit the rule and consider not just the number of brokers sidelined but their size, given that some trading participants handle much larger volumes. He said this was being practiced by other exchanges.
The technical woes that emerged during the second trading day of 2022 drew jeers from investors, several of whom expressed disappointment at the lack of timely announcements from the PSE. Many were quick to notice the poor timing of events, with the trading glitch coming a day after the PSE announced it was named the Best Stock Exchange in Southeast Asia for 2021 by institutional investment magazine Alpha Southeast Asia.
The recent surge in COVID-19 cases dragged Philippine stocks lower, with the benchmark PSE Index dropping 1.14 percent, or 81.36 points, to 7,041.27 on Monday.
Major technical issues affecting frontend trading systems also occurred in 2015, causing disruptions over several days and culminating in the resignation of its chief technology officer Emmanuel Caintic, who was incidentally appointed last month as acting secretary of the Department of Information and Communications Technology. INQ