2-hour afternoon bourse trade starts next year

08/29/2008

The local stock market will hold afternoon off-floor trading for two hours beginning next year as part of its strategy to increase market liquidity and elevate its practices to global standards.

The board of the Philippine Stock Exchange (PSE) approved yesterday new trading hours from 2 p.m. to 4 p.m. at the start of trading for 2009.

“As approved by the PSE board, the PSE’s morning session will be 9 a.m. to 9:30 a.m. (pre-open) and 9 a.m. to 12 noon (morning trading). The PSE will resume trading from 2 p.m. to 4 p.m. with a 10-minute run-off period from 3:50 to 4 p.m. In between the morning and afternoon sessions, the PSE will observe a two-hour break from 12 noon to 2 p.m.,” the stock exchange said in a statement.

PSE president Francis Lim said the PSE board also decided that the afternoon session will be conducted through off-floor trading.

“The decision of our board to extend the trading is part of a coordinated strategy to level our Exchange with its peers in the region and develop our local stock market to its full potential,” Lim said.

“It is also a response to observations from foreign investors who pointed out that since the Philippine stock market is small, they first look at the bigger markets in the morning but by the time they get the opportunity to look at our market, the PSE is already closing, so why bother at all,” Lim added.

“Some foreign investors also pointed out that the PSE should realize that the world is very fluid now. If the trading session is in the morning only, they cannot respond to developments that happen in the afternoon, so why bother to enter the Philippine stock market at all,” he said.

He added the afternoon trading session will also aim to prepare the PSE to take full advantage of market-friendly legislations that are now being put in place by the government like the Personal Equity Retirement Account (Pera) law.

The Pera Law, which was recently signed by President Arroyo, offers tax incentives to people who invest in the stock market.

“With the extended trading hours, overseas Filipino workers in the Middle East can now catch our market live through our online brokers,” Lim added. “And they can invest in our market with special incentives they will get from the newly-enacted Pera Law,” he said.

”I vividly recall one overseas Filipino working in Abu Dhabi who said that he has to wake up at 5 a.m. just to be able to trade in the Philippines because the PSE is open only up to 12 noon. With the special incentives for them under the Pera Law and afternoon trading hours, we hope to tap overseas Filipinos as active players in our stock market,” Lim added.

Lim said the extended trading hours will open the stock market to more investments by creating an overlapping link in trading hours with other exchanges in the region.

Asian investors will find the overlap advantageous, because the afternoon session will allow them to catch the trading hours not only of markets in Asia, but also in Europe, such as Euronext, Deutsche Boerse, OMX, Bolsa de Madrid, and the London Stock Exchange, Lim added.

“The implementation of the extended trading hours will coincide with our timetable in commissioning our new trading system next year which is tentatively scheduled to go live on or before June 30, 2009,” he pointed out.

“All these efforts will mean more trading activity for our brokers and more foreign investments for our country,” Lim said.

“While we in the PSE are vigorously pushing our government to enact market-friendly legislations that will translate into a more robust and vibrant capital market, we in the PSE are also doing our homework by upgrading our infrastructure and practices that will make our stock market attractive to both local and foreign investors,” he said.

The PSE tried in 2002 to hold an afternoon trading but it stopped after eight months. The extension then was very limited as it only extended from 1 to 2:30 p.m. Moreover, the extension under the previous attempt coincided with the mid-day trading break of exchanges in Malaysia, Singapore, Indonesia, Hong Kong and Thailand. Worse, it caught up with the overall market decline around the same period.

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