PSE plans short selling program, new sector indices

BLOOMBERG/VEEJAY VILLAFRANCA

THE PHILIPPINE Stock Exchange (PSE)plans to introduce new products in 2021 as part of its effort to create an “end-to-end” digital experience for stakeholders.

In a statement, PSE President and Chief Executive Officer Ramon S. Monzon said one of the new products is the launch of short selling once some concerns from market participants are cleared.

Mr. Monzon said the PSE wants to address the problems raised by foreign investors on the securities borrowing and lending (SBL) rules and regulations that will enable them to participate in the SBL program.

He said three items need regulatory clearance, namely: the approval of the Securities and Exchange Commission (SEC) on the Philippine Depository and Trust Corp. (PDTC) to be a lending agent; the SEC’s approval of identified offshore assets as collateral for foreign SBL participants; and the go-signal from the Bureau of Internal Revenue (BIR) for the use of Global Master Securities Lending Agreement (MSLA) for foreign participants instead of the local MSLA.

“While there are no more pending items on the short selling program, it has a lot of dependency on the SBL program,” Mr. Monzon said.

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Short selling is the sale of a security that is now owned by the seller, but will be settled by the delivery of borrowed securities. An investor can generate profit by selling borrowed securities at a time of higher prices, then purchasing them at a lower price in the future.

Meanwhile, Mr. Monzon said the exchange is targeting to launch a new sector classification system within the first quarter of the year.

The new system will include two additional sector indices that will increase the indices to eight. It will also reclassify the current industrial, services, and mining and oil sectors into more specific sectors such as consumer, energy and utilities, industrial, mining and materials, and technology, media and telecoms.

Mr. Monzon also said that the second phase of the web-based application PSE Electronic Allocation System (PSE EASy) is slated for 2021.

Phase 2 of PSE EASy will consist of the expansion of subscription options that will include follow-on and stock rights offerings, and the integration of online payment services to the application.

PSE EASy is an application that lets investors register and subscribe online to the local small investor program of an initial public offering.

“This eliminated the need for investors to personally bring their forms and other requirements to receiving centers, which is very useful now that we are under strict community quarantine protocols,” Mr. Monzon said.

Other developments scheduled for 2021 include the creation of an online know-your-client platform (KYC) that will allow investors to open an account for those living outside Metro Manila and those overseas.

The PSE also plans to provide a new data analytics platform that will let investors check data on their own, and a new clearing and settlement system that is expected to launch in the second half of 2021. — Revin Mikhael D. Ochave

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