PSE tightens rules for trading suspensions

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

The Philippine Stock Exchange (PSE) is tightening the rules on trading during times of natural disasters and network outages, providing more clarity for market stakeholders.

The proposed changes outline new conditions that would trigger a market-wide halt.

For example, the PSE said a halt will be implemented if stock brokers that account for more than 50 percent of average trading value for the past six months cannot access the bourse’s trading system.

This could be due to problems with the PSE’s systems as well as other causes such as natural calamities.

Current suspension rules

Currently, the PSE rules allow for a suspension if at least one third of brokers cannot access the trading platform.

“It is the mandate of the exchange, as an organized marketplace, to remain open for business and operate at all times for the various stakeholders, and to halt trading on a market-wide basis only as a last resort,” the PSE said.

The bourse also requires all brokers to have a correspondent trading participant.

The correspondent broker must have a front-end system from a different vendor but if the selected correspondent uses the same provider, the said broker “should be clustered in a silo and fix gateway that is different from the connection” of the appointing broker, the rules showed.

Bourse’s discretion

The PSE will also have the discretion to cancel trading due to events, such as fire, flood, civil commotion, terrorist attack or any other situation that might post a risk to the PSE’s employees.

This will also apply to their operations during powerful storms. In this situation, the PSE will cancel trading if there is a storm signal strength of 3 to 5.

This will be determined by the state-run Philippine Atmospheric, Geophysical and Astronomical Services Administration or Pagasa for 6:00 a.m. of the following trading day.

The PSE is inviting interested parties to submit their comments and requests for clarification by Oct. 24 this year.

The bourse added the proposed rules are the result of careful review of market data and a survey of seven other exchanges in the region.

These were the Indonesia Stock Exchange, Stock Exchange of Thailand, Singapore Exchange, Bursa Malaysia, Korea Exchange, Hong Kong Exchanges and Clearing Ltd. and Japan Exchange Group. INQ