PSE seeks early adoption of broker anonymity rule

MANILA, Philippines - The Philippine Stock Exchange (PSE), the operator of the country’s stock market, is looking to fasttrack the implementation of the broker anonymity rule.

The early implementation of the rule will allow the PSE to reap the benefits of improved liquidity and investor protection by this year, the bourse said.

Broker anonymity refers to the practice of not showing the broker identifiers for trading matched at the trading engine.

“Since we announced our plan to move to a broker anonymous environment, we have been receiving positive feedback from market participants who see the move as a way to attract more investors to trade in our market,” said PSE president and CEO Hans Sicat.

“Implementing this program this year instead of next year will allow us to experience the upside from this change much earlier,” he added.

Early this year, the PSE announced its plan to launch the broker anonymity rule in March 2015.

The move, which is in line with global best practices, targets improving liquidity and preventing the herding mentality among brokers.

PSE said it is evaluating the early implementation of the rule, which is expected to reduce the bid-ask spreads in local share prices.

With the advanced rollout of the rule, the PSE said it will do away with the phased implementation.

Previously, the PSE targeted the first phase implementation in March. It will involve limiting the visibility of brokers identifiers of matched trades only to brokers and their systems.

The second phase will start in March 2015, making all broker identifiers anonymous to all market participants.

So far, broker identifiers are not displayed pre-trade or when orders are still being queued. However, once orders are matched, the broker identifiers of the executing brokers become visible.

“Even as we are now planning to have broker anonymity implemented this year, we have to evaluate the readiness of the market and various systems for full broker anonymity under the reduced time frame to prepare for this change,” Sicat said.

The PSE committed to finalize the study over the next weeks.

“We would like to assure the investing public that, much like in other markets abroad that have stopped displaying broker identifiers for matched trades, surveillance operations will not be affected as regulators will continue to have access to information on broker identifiers,” Sicat said.