PSE adopts measure to boost liquidity

MANILA, Philippines - In a move aimed at boosting stock market liquidity, the Philippine Stock Exchange (PSE) has adopted a resolution removing member-broker identity from its market data feed.

Under the current system, the codes of buying and selling brokers in every matched trade are displayed in the trading screens of market participants.

PSE president Francis Lim said the move is intended to put the local bourse at par with other exchanges which have removed broker identifiers for executing orders.

Among the ASEAN exchanges, the Bursa Malaysia, Singapore Exchange Ltd., and the Stock Exchange of Thailand have implemented this policy.  Other European exchanges are expected to follow suit.

When market players know who is buying and who is selling, investors may tend to be more worried of the possibility of front-running or unnecessarily facing higher execution costs.

Front-running is the practice of brokers executing trades on their own account before processing a customer’s order.

 “Contrary to perception that taking out the broker identifier is a disservice to market players because it reduces transparency, broker anonymity actually promotes fairness and affords investors with deeper market depth and liquidity,” Lim explained.

Lim said the investing public, especially institutional investors, will also benefit as they can transact with their brokers without drawing unwanted attention.

“This policy also improves investor confidence because an investor will face lesser risks that his orders will move the market. Their orders would be disclosed only if they trigger the limits prescribed under our existing rules,” he said.

“We would like to assure the public that broker anonymity shall in no way affect our surveillance operations. Our surveillance department will continue to have access to data on broker identifier which they use in investigating and monitoring any illegal trading activity in the market,” Lim pointed out. – Zinnia dela Peña