PDEx puts in place seamless trading link for government securities

The Philippine Dealing and Exchange Corp. (PDEx) has introduced the straight through processing (STP) for trades in government securities, providing a seamless link between trading and settlement among its participants.

The STP provides participants with the benefit of a single point of entry for trades without the need for manual inputting of data in the settlement side.

It operationalizes a major component of the agreement among the Bangko Sentral ng Pilipinas (BSP), the Bureau of Treasury (BTr), and the Philippine Dealing System’s group for the interface that will achieve a fully electronic trading and settlement on a delivery-versus-payment (DvP) basis of government securities.

Settlement instructions are already captured in the trade details and settled at the BTr’s RoSS and BSP’s PhilPaSS.

PhilPaSS is the real-time interbank fund transfer facility operated by the BSP while RoSS is the electronic registry for government securities operated by the BTr.

By eliminating the manual intervention in the settlement process, STP provides operational efficiency and error-free settlement. Reconciliation and monitoring of settlement, customarily done at the back-office, are also made faster with participants simply logging on to the Internet-based PDS gateway.

The PDS group said the launch of the STP "is part of a continuing effort in providing participants with more efficient, transparent, and real-time solutions leading to a more developed capital market". The PDEx recently obtained a self-regulatory organization (SRO) status by the Securities and Exchange Commission.

It serves as the venue for an efficient, stable, and secure market for the trading of securities by providing a centralized fixed income trading facility. This infrastructure promotes price discovery and transparency, provides businesses equitable access to public funds, creates a deeper investor base, and promotes an active secondary market for fixed income securities.

Last year, PDEx handled total transactions worth P437.85 billion. Of this amount, value turnover on fixed rate Treasury notes was 81.6 percent or P357.22 billion, Treasury bills was 12.9 percent or P56.53 billion and retail Treasury bonds was 5.5 percent or P24.09 billion.

The first phase of the fixed income trading platform implemented the inter-dealer negotiated deal market for government securities. Traders use the screen terminals of the fixed income trader workstations of PDEx to communicate, negotiate and deal with each other.

This minimizes, if not totally eliminates, errors in verbal or telephone confirmations of transactions between and among traders and treasury operations units in different trading participants.

The PDEx screen provides real-time information that makes trading transparent, timely, and cost-efficient. It is also seen to eventually reduce the country’s dependence on foreign currency borrowings.

The PDEX is a wholly-owned subsidiary of the PDS group, with a multi-sectoral ownership base composed of the Bankers Association of the Philippines (BAP), Philippine Stock Exchange (PSE), Investment Houses Association of the Philippines (IHAP), Financial Executives Institute of the Philippines (FINEX), Social Security System (SSS), Philippine American Life and General Insurance Company, San Miguel Corp., Computershare Markets Technology, and Tata Consultancy Services.