PSE extends pre-close period

MANILA, Philippines - The Philippine Stock Exchange (PSE) is making a slight change in trading schedule as it will extend the “pre-close” period starting next month.

“The Securities and Exchange Commission, in its letter dated Sept. 26, informed the PSE that the commission approved the amendments to the Revised Trading Rules and Implementing Guidelines,” the local bourse said.

The pre-close period will be stretched to five minutes from three minutes starting Nov. 4. The pre-close phase allows trading participants to enter orders, which will be matched using the computed closing price for a security.

With the revision, pre-open will start at 9 a.m., followed by market opening at 9:30 a.m., market recess at noon, resumption of afternoon trading at 1:30 p.m., pre-close at 3:15 p.m., run-off at 3:20 p.m., and market closing at 3:30 p.m.

In July, PSE sought public comments after its board of directors approved the longer pre-close auction period.

The revision will align with practices in the region, with Hochiminh Stock Exchange’s pre-close period at 15 minutes, followed by Indonesia Stock Exchange and Stock Exchange of Thailand (10 minutes), Singapore Exchange (six minutes) and Bursa Malaysia (five minutes).

It will also “allow the trading participants to assess and counter a sharp price move at the close,” the PSE said.

“Some trading strategies being used may require more time for the trading participants to react depending on market conditions,” it added.

Trading participants are also seen to benefit from the extra time to execute orders.

Exchange-traded funds and index funds, which are mostly benchmarked against the closing price of underlying stocks, can take advantage of the extended pre-close period.

“If a basket of underlying  securities is composed of a large  number of stocks, this may require longer time for trading participants to execute orders in order to minimize impact on prices of the securities,” the PSE said.

In 2010, the operator of the country’s sole stock exchange introduced a three-minute pre-close period, along with the launch of its new trading system PSETrade.

But last year, the PSE extended its trading hours up to 3:30 p.m., resulting in a total of four hours and 30 minutes of trading, up from the previous two hours and 40 minutes in which trading ends at 12 noon.