PSE to introduce $-denominated board

After more than a year since gaining approval from the regulatory agencies, the Philippine Stock Exchange (PSE) is finally set to introduce a dollar-denominated board that will give investors the option to trade in selected securities listed abroad.

"As an enhancement to the present trading infrastructure, the exchange will be launching the Dollar-Denominated Trading (DDT) facility within the second quarter of the year," PSE president Ernest Leung said in a circular to brokers.

Under the DDT scheme, trading for the offshore listed securities will be opened simultaneous with the regular morning peso trading session at the PSE. However, only issues listed in foreign exchange such as the US, Canada, Hong Kong, and London shall be traded and settled in dollar denominations.

There was an earlier proposal for the PSE to allot an extended off-floor trading session in the afternoon, after the close of the main morning session, for trades of securities linked to the Philippine market.

Leung said for the initial launch of the DDT, three offshore listed securities will be offered, namely PLDT, Manulife Financial Corp. and Sun Life Financial of Canada.

He said the settlement of these trades will follow the existing T+3 (three trading days) settlement cut-off, although clearing of the dollar cash element shall be coursed through a foreign bank.

"This is an option that shall be made available to all interested trading participants and the exchange shall not impose participation as mandatory," Leung said.

He pointed out that among the objectives in offering the DDT are: 1) the elimination of currency or foreign exchange risks; 2) greater flexibility in the present trading infrastructure by allowing multiple currencies for trade transactions; 3) the elimination of the need for costs of conversion for American Depository Receipts (ADRs); and 4) preparation for cross-border trading.

Although only three issues are included in the initial launch of the DDT, these securities may be expanded to additional issues or instruments such as "B" shares of local companies and the other local stocks listed overseas such as Benguet Corp., First Philippine Fund, Philex Gold (Canada) and Ionics EMS (Singapore).