PSE short selling nears reality

Philippine Stock Exchange, Bonifacio Global City. INQUIRER PHOTO/LYN RILLON

MANILA  -The Philippine Stock Exchange (PSE) is looking forward to the official launch date for short selling after obtaining the go-signal for critical securities and borrowing lending (SBL).

Short selling, which allows investors to profit from a drop in share prices instead of relying on price appreciation, is among the new products the exchange hopes will bolster weak market activity. While a standard feature in most other jurisdictions, the domestic short selling regime has lagged behind given long delays in the approval process for its rules.

The PSE, however, said in a statement on Monday that the guidelines for short selling had taken effect immediately. This was after regulators had given their go signal on “critical components of securities borrowing and lending.”

“Short selling can only function if an SBL program is in place,” the exchange said.

“The PSE will make a separate announcement on the official launch date of the short selling program,” it added.

Regulatory green light

The exchange noted that the Securities and Exchange Commission (SEC) had approved the offshore collateral for SBL in May 2023 while the Bureau of Internal Revenue (BIR) had accepted the filing and registration of the Global Master Securities Lending Agreement in September this year.

The approval of the BIR was among the key requirements needed before short selling could be implemented.

“[There will be] at least more products in the market. Hopefully it will help boost volumes,” COL Financial Group chief equity strategist April Lynn Tan told the Inquirer on Tuesday.

PSE president Ramon Monzon issued a statement thanking the SEC and BIR for their approvals on the rules for SBL and short selling.

“This development brings us a step closer to the full adoption and implementation of these much-awaited programs,” he said.

The PSE also announced that it had updated the eligible securities in its short selling guidelines to include members of the PSE MidCap and PSE Dividend Yield indices. Initially, only securities comprising the PSE Index and exchange traded funds were considered eligible securities for short selling. INQ