PSE narrows trading band

PSE trading floor in BGC

With stocks on a freefall across global markets, the Philippine Stock Exchange (PSE) has amended its trading rules to temper the daily decline of local stock prices.

In a memorandum dated March 21, PSE president Ramon Monzon said the PSE had obtained approval from the Securities and Exchange Commission (SEC) to amend the lower static threshold from 50 percent to 30 percent below the previous close or the last adjusted closing price, whichever is applicable.

This means that whereas a stock could previously go down by as much as 50 percent from the previous day’s closing rate, the new rule now limits the decline to 30 percent.

The new rule will take effect on Tuesday, March 24.

“We are looking at measures to address the present volatility in the stock market due to uncertainties from COVID-19. One of the measures we decided to adopt is to tighten the trading band for securities,” PSE president and CEO Ramon Monzon said.

“We benchmarked the adjusted lower static threshold level with what other exchanges in the region currently implement, which is between 10 and 30 percent,” Monzon explained.

Monzon added that the PSE had configured its trading system to recognize a 30 percent decline in share price as the floor price of a security.