BIZ BUZZ: Another PSE innovation coming: derivatives

If investors have been noticing that the Philippine Stock Exchange (PSE) has been rather proactive in implementing reforms and introducing product innovations of late, they’re not wrong.

The bourse has indeed been lining up initiatives aimed at further improving the local capital markets—specifically on the equities trading side—to put the country on equal footing with other stock exchanges in the region (and hopefully attract more funds into the local market).

And last week’s announcement that short selling will finally be introduced to the PSE, almost three decades after it was first proposed, is about to be followed up with another important innovation.

Biz Buzz hears that the PSE is moving to introduce derivatives trading in the local market.

Simply put, derivatives are financial instruments whose value is based on the price movement of an underlying asset that can be used by investors to manage risk in their portfolios. These include futures and forward contract, options contact like “puts” and “calls,” and warrants, among many others.

Used properly, derivatives help investors hedge against risk of market fluctuations. They can also enhance transparency and liquidity in the market by providing market-based pricing information.

Of course, used improperly, derivatives can bankrupt investors in a blink of an eye, which is why the bourse is taking great care to implement safeguards and make sure that only qualified investors get to handle them.

We’re told the PSE leadership is now talking to foreign counterparts for an initial product like an index futures contract to be traded locally.

And this time, unlike short selling, it probably won’t take three decades to implement. In fact, the goal is to have derivatives trading on the PSE by mid-2025. Abangan!

—Daxim L. Lucas

Tesla man in DFNN

As part of its efforts to venture further into “technological frontiers,” DFNN Inc. has appointed Tesla engineer Nicholas Te to its board of directors.

Te is a Materials Science and Engineering graduate of the University of California in Berkeley and has been an engineer at Elon Musk’s Tesla Inc. for three years.

That experience, DFNN said, will help execute its strategic vision of diversifying into cutting-edge technology domains.

“With the majority of our business pipeline deeply entrenched in pioneering technology, this strategic appointment underscores our commitment to staying at the forefront of technological advancements. Our aim is to synergize our current expertise with the innovative vision of our technology partners, creating a formidable team that will oversee the flawless execution of our strategic initiatives,” DFNN said in a statement.

For his part, Te said he was joining the board “with great enthusiasm” and that it was a “profound honor” for him to be in the position to contribute to DFNN’s “journey toward excellence.”

“My career is characterized by a dedication to innovation, strategic thinking and fostering collaboration among diverse teams, all of which align seamlessly with DFNN’s growth-focused vision,” he said.

“As DFNN starts diversification, it is exciting to hear that we will be among the first to venture into space investment. As a country behind in the space race, primarily for operational and commercial satellites, I believe that our foray will create a platform for investments in weather, communication, and land development/mineral resource technologies.

“DFNN’s storied experience with gaming, digital commerce, cyber security, and artificial intelligence will greatly benefit our navigation of these untested waters,” he concluded.

—Tina Arceo-Dumlao