Creation of commodities trading put on hold

MANILA, Philippines - The Philippine Stock Exchange (PSE) is keeping plans for a commodities trading on hold pending the creation of ample infrastructure.

The operator of the country’s only stock exchange will focus this year on launching more and maximizing recently rolled-out financial products to deepen the capital market, an executive said.

“I think right now that particular [commodities trading] project is put a bit at the backburner,” said PSE president and CEO Hans B. Sicat.

During the time PSE studied commodities trading, it encountered difficulties in terms of different standards of measure for rice and the physical delivery of goods, Sicat said.

“We will make sure we have the full platform and infrastructure. Then it might be easier at that point to look at commodities,” Sicat said.

In 2011, PSE switched to a new electronic system PSETrade, replacing the Maktrade system that dates back to the unification of the trading operations of the Manila and Makati stock exchanges 15 years ago. The new trading system allows more trading transactions and also has a provision for commodities and derivatives trading.

For now, the PSE is sticking to financial products that are easier to launch and regulate, Sicat said.

“What we’d like to do is to get products that are easier to launch,” Sicat said.

For instance, PSE launched last year the Exchange-Traded Funds (ETFs), which are securities and investment instruments that monitor a commodity of assets like an index fund but trades like a normal stock in an exchange. PSE is looking to introduce fixed-income ETF and commodity ETFs.

Other products in the works are derivatives that will be offered in the Philippines, Sicat said. PSE and Singapore Stock Exchange earlier launched the Philippines-linked derivatives products that is now offered in the Singapore bourse.

For 2013, combined market capitalization of PSE-listed firms picked up nearly a tenth to P11.93 trillion from P10.93 trillion in 2012. Average daily turnover value jumped 45 percent to P10.52 billion from P7.26 billion in 2012.

Meanwhile, PSE is looking to amend the board composition of Capital Market Integrity Corp. (CMIC) that focuses on monitoring and policing the equities market.