The Philippine Stock Exchange (PSE) is asking the Securities and Exchange Commission (SEC) to impose a one-day debtline for the settlement of all listed trades instead of requiring brokers to present collateral deposit such as cash or bank guaranty for unsettled trades above P5 million.
SEC sources said brokers made the suggestion, explaining that requiring collateral deposit equivalent to the value of trades until these are paid within the existing four-day settlement period will be disadvantageous to brokers.
The brokers said such scheme will ban them from accept in big volume orders which will mean foregone revenue, especially if they do not have the collateral deposit delivered to the Securities Clearing Corp. of the Philippines (SCCP), the clearinghouse for listed stocks of the PSE.
The SCCP has been directed by the SEC to require brokers beginning next month to make collateral deposits for unsettled trades beyond P5 million.
The mark-to-market collateral deposit can also be in the form of PSE-listed securities which are part of the PSE index.
The collateral deposit requirement is one of several directives issued by the SEC to ensure liquidity of the capital market. It intends to cover any market movement loans in the event of a default by a member of its obligations due to temporary illiquidity, insolvency or bankruptcy.