PSE to put up new trading system by yearend

MANILA, Philippines - The Philippine Stock Exchange (PSE) is scheduled to put its new trading system in place either in the first week of December or third week of January next year, a move that will pave the way for the trading of sophisticated capital market instruments, including those that are only in their development stage.

PSE president Francis Lim told reporters that the new trading system is originally set for implementation on Oct. 2 but its launch will be moved to between Dec. 4 and the third Friday of January 2010.

The new trading system application was acquired from NYSE Euronext, which operates the largest exchanges around the world including the New York Stock Exchange. This application is used to trade a wide range of cash, debt and derivative instruments

With the new system, the PSE has proposed to increase the maximum price decrease of a stock in a single day to 50 percent from the existing 40 percent, equal to the maximum upward limit of 50 percent.

Lim explained that the new trading system only allows one figure for the price ceiling and floor.

The PSE has asked interested parties to submit their comments regarding the trading band proposals on or before Sept. 15.

All proposals will be submitted to the Securities and Exchange Commission for review and approval.

The exchange proposed that the trading band be lifted when trading resumes for securities that have been suspended for a period of one year or more. The trading band may also be lifted when the PSE determines that there has been an event or occurrence that may cause the price of the security to change drastically, or when the application of the trading band on the price may render impractical the trading of the security upon prior notice by the PSE “as may be warranted under the circumstances.”

The new system is seen to improve the exchange’s capacity to handle any future sharp increase in value turnover.

The trading band is a safeguard against intraday volatility and possible insider trading by capping the gain in the price of a stock.