PSE eyes shorter trading cycle period

The Philippine Stock Exchange (PSE) is targetting a further reduction in the trading cycle to drive up liquidity in the market and encourage more investments.

PSE president Ernest Leung said one of the areas the Exchange will look at for improvement this year is the lessening of the settlement period from the current T+3 level.

The T+3 period stands for the trading day plus three working days wherein all transactions, whether buying or selling securities, is settled. This means that a seller should be able to deliver the stock certificate to his broker and the buyer must have paid the amount of transaction to his broker within three working days after the trade.

"This would then make available more funds at shorter time. With more liquidity, this would lead to the development of the capital market," Leung said.

Historically, settlement was done after a 27-day cycle since this was done manually. With the entry of scripless trading wherein settlement is done via book-entry system through the Philippine Central Depository, transactions are settled after four working days. Under this system, the investor has the option to hold on to this certificate or lodge (deposit) this certificate in PCD through his broker participant account.

Leung, who assumed office only last week, said other reform measures and new policies will be slowly put in place at the PSE to improve and strengthen the bourse’s image and performance.

Since its demutualization last year, the PSE has been moving forward into a more publicly-controlled corporation with the entry of more non-brokers in the PSE board and the spin-off of critical units such as the Compliance and Surveillance group and the Information Technology unit.