MANILA, Philippines – The Philippine Stock Exchange (PSE) is seeking feedback on a proposal to introduce a negotiated trades facility, a move aimed at filling what it described as an operational gap in the execution of prearranged transactions in the local market.
Under the proposal open for comments until July 7, negotiated trades will serve as a variant of the existing block sale framework, allowing investors and trading participants to execute prearranged transactions that currently fall outside available trading mechanisms.
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At present, regular block sales require a minimum transaction value of P20 million and must be priced within 5 percent above or below the reference price. Special block sales, meanwhile, require transactions worth at least P50 million.
“A prearranged transaction that does not meet the minimum requirements for block sale cannot be executed in the Block Sale Market but may be entered as a cross transaction in the regular market, provided the execution price is within the best bid and offer or BBO,” the exchange said.
The PSE noted that there is currently no facility for transactions that are below block sale requirements but are also priced outside the BBO range.
The proposed negotiated trades framework aims to address this issue by allowing smaller prearranged transactions to be executed at commercial terms agreed upon by the parties involved.
According to the exchange, the mechanism could improve transparency and support better price discovery in the market.
The draft rules provide that negotiated trades will not be subject to minimum volume or value requirements.
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Transactions, however, may only be executed within 15 minutes after the runoff or trading-at-last session and must be priced within 5 percent above or below the stock’s full-day volume-weighted average price (VWAP).
Transactions involving suspended or halted securities will be prohibited.
Negotiated trades may also only be executed by authorized sales people or traders of a trading participant and will be settled in accordance with the rules of the Securities Clearing Corporation of the Philippines.
For whole-day trading sessions, the PSE plans to hold the closing VWAP negotiated trades session from 3 p.m. to 3:15 p.m., while a 12:10 p.m. to 12:25 p.m. session will apply during half-day trading sessions.
The exchange also proposed that negotiated trades be reflected in end-of-day reports. In cases where there is a delay in the computation of VWAP, the PSE may suspend the negotiated trades session and cancel transactions for the day if the issue could not be resolved in time. INQ