PSE eyes trading rule changes to allow uninterrupted operations

THE PHILIPPINE Stock Exchange (PSE) is tweaking its trading rules to keep the market open even when the Bangko Sentral ng Pilipinas (BSP) has suspended its clearing activities.

The proposal came on the heels of a nationwide transport strike that forced financial markets to shut down last Monday after Malacañang suspended classes and work in government offices and ahead of a possible declaration of non-working days as the Philippines host the Association of Southeast Asian Nations Summit next month.

“I’d rather be open for business rather than closing shop when there are avenues and solutions to operate. I want investors to have access to the market,” PSE Chief Operating Officer Roel A. Refran said in a phone interview on Tuesday.

In a memorandum posted on its Web site, the PSE said it is soliciting comments on proposed changes to the existing trading rules that will enable the exchange to “operate and remain open for trading even on days when the clearing activities of the BSP or Philippine Clearing House Corp. are suspended.”

The settlement of trades at the PSE uses the Philippine Payment and Settlement System ( PhilPaSS), the central bank’s real- time gross settlement system that enables high-value payments between banks through deposit accounts they maintain with the BSP.

As cash payments for stock purchases are coursed through the PhilPaSS, the PSE relies on it being operational in order to allow settlement to be completed.

“My bias is to make sure trading pushes through. They just have to move forward their settlement obligations, which is what is happening in other markets,” Mr. Refran said, noting that the PSE is working with custodians and brokers to facilitate adjustments in settlement.

The PSE, in the memorandum, said it is important for the local bourse to “minimize situations where trading is suspended unexpected,” even as it acknowledges that “the declaration of nonworking days for government offices is a prerogative vested on government alone.”

Meanwhile, the PSE is working with the Department of Energy (DoE) in line with its plan to become a world-class exchange.

“We started talks with the DoE if we could also operate an electricity exchange,” PSE President and Chief Executive Officer Ramon S. Monzon told reporters on Monday. “An exchange is a technology company... Our selling point basically to the DoE, by having a professional organization operate an electricity exchange, you insulate it from political influences.”

Mr. Monzon, who was elected as the bourse chief this year, envisions the local bourse to become a “Philippine Exchange” that allows trading of multiple asset classes such as fixed- income, electricity, derivatives and commodities in addition to equities.

Sought for additional comment, Mr. Refran said talks are “very preliminary,” with the PSE eyeing to be a “technology service provider to an electricity market” as part of a broader plan to “eventually have a commodities market.”

The Philippines has a wholesale electricity spot market ( WESM), a trading platform where distributors buy power they require beyond what their supply contracts provide. WESM is operated by Philippine Electricity Market Corp.

“At the moment, the market is being served. What we need are refinements,” Mario C. Marasigan, director of the DoE’s Electric Power Industry Management Bureau, said in a separate interview.