Brokers say sorry over REIT trading hitch

At least two stock brokerage houses are absorbing losses of clients who were unable to trade their shares in newly listed AREIT Inc. as the Securities and Exchange Commission (SEC) investigates complaints raised by furious investors.

But the trading hitch involving the county’s first real estate investment trust (REIT) listing also had some market observers raising concerns over the lack of coordination between a number of stockbrokers and the Philippine Stock Exchange (PSE).

Ultimately, they said these were birthing pains and all parties shared some of the blame, with small investors such as Mark—who would only go by his nickname—caught in the middle.

“When the stock price went down, I was hoping to cut losses but apparently, I couldn’t trade,” he told the Inquirer. “I just saw my money burn and I couldn’t do anything. It’s small but it’s hard-earned money so I felt bad.”

Mark said he was hoping to earn some profit when he bought shares of AREIT, which is backed by property giant Ayala Land Inc., ahead of its listing day last Aug. 13.

His story was common among clients who tried to sell AREIT as the stock fell from its initial public offering price of P27 to P24.10 a share the next day or a loss of 10.7 percent over two sessions.

At the same time, interested investors in the affected platforms could not buy shares of AREIT.

COL Financial Group, the country’s leading online trading platform with hundreds of thousands of clients, apologized on Monday and said it would absorb losses of those that sought to sell AREIT shares on Thursday and Friday.

It said this would amount to P2.90 a share—a bonus to clients as their AREIT holdings were left intact. COL said normal trading of AREIT was restored on Monday.

Last week, Abacus Securities’ MyTrade immediately told clients it would honor rejected trades even while it addresses the problem.

PSE president Ramon S. Monzon said in a text message that some brokers failed to secure the needed certification from the bourse for their third-party software systems in time for AREIT’s listing day.

Monzon said COL applied for certification on Aug. 13 while Abacus applied early this month but some of its other platforms also needed certification.

Several brokers understood they were eligible to trade REITs but the certification requirement was unclear and they were surprised the system was rejecting trades of AREIT shares, Inquirer sources said.

“Brokers with [third party] systems need to have their systems tested and certified by the PSE to be operationally ready as required by SEC,” Monzon said.

He said this was important since REIT holders were subjected to added requirements such as a Name-on-Central-Depository or NOCD. Previously, NOCDs were required only for dollar-denominated securities.

Monzon said five brokers whose systems still needed to be certified were Globalinks, RCBC Securities, UCPB Securities, Philstocks and Unicapital Securities.

Other brokers using third party providers such as BPI Securities, AB Capital Securities, First Metro Securities, AP Securities, F. Yap Securities and AAA Southeast Equities were able to trade AREIT shares with no problems.

Over the weekend, the SEC said it was investigating the issue and was “currently gathering more information and assessing the situation.”

In the meantime, offers by brokers might soothe some clients except for those who decided not to put in sell orders, thinking it was futile after hearing of orders being rejected.

They can rest easier for now after ARIET recovered some lost ground as it closed at P25.95 a share on Monday, a gain of 7.7 percent. INQ