PSE to introduce cross-border trading

MANILA, Philippines — The Philippine Stock Exchange (PSE) plans to introduce new products to help boost liquidity and entice more investors into the market.

For instance, it aims to introduce depository receipts in the market as it plans to roll out cross trading transactions, said PSE president and CEO Ramon Monzon.

“We are also opening the market for cross-border trading, both of Philippine securities and shares of listed companies abroad through an instrument called depository receipts. These DRs will enable local investors to further diversify their portfolios. The DRs will have underlying shares of foreign publicly listed companies at a one to one ratio; underlying shares from both PSE and partner exchanges will be identified by issues based on liquidity and potential demand,” Monzon said last week.

He said this is expected to generate liquidity in the market, as issuers from other markets create DRs with Philippine-listed companies as the underlying asset.

In industry parlance, a DR is a negotiable certificate which represents shares in a foreign company traded on a local stock exchange. It gives investors the opportunity to hold shares in the equity of foreign countries.

Furthermore, it gives investors an alternative as they trade on an international market.

The PSE hopes to introduce this in the fourth quarter of 2024 after finalizing the regulatory framework with the Securities and Exchange Commission, Monzon said.

Aside from depository receipts, the PSE chief said there are several other initiatives that the PSE developed to help boost the market.

These include working with the Hong Kong stock exchange to develop and introduce derivatives in the stock market.

Derivatives are instruments based on price movement of an underlying asset.

It can be used by investors to manage risk in their portoflio; to hedge risks against stock price fluctuations and it can introduce transparency by providing market-based pricing information.

Other earlier initiatives include easing listing rules for small and medium enterprises to encourage them to list in the local bourse.

The PSE will also launch the second phase of its PSE EASy platform next year.  PSE EASy is a mobile application developed for stock market investors. It enables users to subscribe to shares offered in the market.

“We will be launching PSE EASy, the second phase, in 2024, which will integrate the payment facility for locall small investors or LSIs,” Monzon said.

The PSE will likewise do a nationwide launch of its new in-app stock market platform GStocks in partnership with GCash.