In a notice to PSE brokers and the public, Exchange president Ernest Leung said management decided to revert to the 9 a.m. to 12:10 p.m. trading schedule effective Oct. 15, 2002 to enable brokers to survive the prolonged downturn in the equities market.
Leung said that while there are valid considerations for extended trading, incomes realized by many trading participants and the exchange, under prevailing market conditions, have not been sufficient to cover the incremental cost of operations in the afternoon despite measures to reduce and alleviate costs.
Some brokers have complained that meager profits from trading are no longer enough to cover fixed and overhead costs.
The local market has been on a slump due to the growing prospects of a US led attack on Iraq, rising oil prices, domestic security issues and the government’s widening budget deficit.
With no good corporate or economic reports forthcoming, investors have shield away from the market preferring to hold on to their cash as they await a more stable market.
PSE governor Robert Coyiuto Jr. said it was high time management heeded brorkers’ call for the suspension of the afternoon trading session. "We were actually the ones who asked for it. That’s always been the position of majority of the broker-stockholders on this issue. Majority wins. Why did it take that long for them to arrive at such decision?" Coyiuto asked.
Coyiuto demanded that Leung and PSE chairman Vivian Yuchengco shoulder the additional costs incurred by the exchange in relation to afternoon trading.
He also blamed the present management for the continued decline of the market. "Our equities market is so bad because of these people running the exchange," he said.
Joseph Roxas, a nominee of Eagle Equities Inc., said the move was not in the right direction. "It’s a step backward because almost 100 percent of the exchanges in the world have afernoon trading session," he said.
The Exchange started trading in the afternoon in February in the hope of attracting more investors and being at par with other markets overseas. From the original 9 a.m. to 12:10 p.m. trading timeslot, an additional one and a half hours were added to capture more foreign investors.
A study earlier conducted by the floor trading and arbitration committee showed that there was no substantial increase in the trading volume since the start of afternoon trading session in Feb. 18, 2002. The FTAC said the trading volume was in fact much higher during the period before the afternoon trading session was adopted.