SEC probes glitch that halted PSE trading

The Securities and Exchange Commission (SEC) is digging deeper into the technical glitch that paralyzed stock trading operations last Tuesday as the Philippine Stock Exchange (PSE) put in place a backup system to prevent the recurrence of such a disruption.

Asked about the matter, SEC chair Emilio Aquino said in a text message on Wednesday that SEC Commissioner Ephyro Luis Amatong “is looking into it.”

Amatong, in a phone interview with Inquirer, said the SEC’s Market and Intermediaries Division under the Markets and Securities Regulation Department had already written the PSE on Tuesday requesting for a complete report that must be submitted by noon time on Thursday.

But the SEC had been in contact with PSE officials on the matter since Tuesday, Amatong said.

“PSE has been cooperative and has been keeping us informed,” Amatong said. “It took them the whole day to try to isolate the problem. They’re still isolating the problem now, but they have a more definite idea of where the problem arose.”

Trading at the local bourse was suspended on Tuesday as the PSE’s trading platform provided by National Association of Securities Dealers Automated Quotations (Nasdaq) and its front-end system encountered glitches that prevented 43 stock brokerage houses that were using the Flextrade front-end system from connecting to the Nasdaq platform.

“Now, in order to ensure that this would not happen again, either today or in the future, PSE has already come up with a mechanism for manually connecting some of the brokers. They were prepared to do that this morning just in case the problem occurred again, but thankfully, it did not occur,” Amatong added.

Nonetheless, he said the PSE had assured the SEC that such a backup plan was ready for implementation, if and when needed.

Citing initial reports from the PSE, Amatong said the glitch had something to do with the application programming interface (API) between Nasdaq and Flextrade.

“Both vendors of course claim that there’s nothing wrong, and again, this has not happened before, but they have narrowed it down to the issue on the API between the two systems,” Amatong said.