PSE to introduce more products

MANILA, Philippines — The Philippine Stock Exchange Inc. (PSE) is laying the groundwork for new products and services this year to inject more life into the market which was mostly sluggish last year.

PSE president and CEO Ramon Monzon said the exchange’s priority for 2024 to 2026 would be to expand its product portfolio to improve market liquidity and pursue new growth areas.

To support these strategic priorities, the PSE has drawn up a list of initiatives starting with a reduced board lot, which effectively allows more retail investors to buy stocks.

“The proposed board lot amendment will significantly decrease the minimum investment to buy stocks at the PSE to as low as P100,” Monzon said.

As such, retail investors with a limited budget will have access to a wider range of stocks to invest in, increasing their overall participation in the market.

A board lot refers to the number of shares defined by a stock exchange as a trading unit.

The proposed board lot amendment is awaiting approval from the Securities and Exchange Commission.

Another initiative that the PSE will introduce is algorithmic trading.

The PSE is proposing to provide provisions that will expressly allow algorithmic trading in the Revised Trading Rules, which are also pending approval by the SEC.

Algorithmic trading, as defined by Wikipedia, is a method of executing orders using automated pre-programmed trading instructions, accounting for variables such as time, price, and volume.

The PSE also plans to introduce VWAP Trading or volume-weighted average price trading, which is a tool that improves market transparency.

“Institutional investors can make use of VWAP trading to execute large orders to avoid artificially inflating the price of a security,” Monzon said.

The SEC has already approved the rules for VWAP trading.  Development of the platform is ongoing.

The PSE will also collaborate with ASEAN exchanges for depository receipts.

This initiative involves depositary receipts with foreign securities as underlying shares to enable cross-border trading.

“At the same time, DRs with Philippine underlying shares will also be issued in a counterpart exchange. This exposes PSE-listed companies to foreign investors through depositary receipts that can potentially improve foreign participation in the market,” Monzon said.

The PSE has already started preliminary consultations with key market participants to develop rules and regulations for this.

Completing the list of initiatives is more support for fintech platforms that will enable more stock trading.

Last August, the PSE, in partnership with Globe Telecom’s GCash and AB Capital, launched GStocks, an initiative that aims to activate the untapped potential of the Philippine equities market using an in-app stock trading platform in GCash.

Maya likewise launched its Maya Stocks feature with Philstocks as the partner broker.

Maya is set to include 2TradeAsia, DragonFi, and Seedbox in the lineup, allowing users to choose their preferred broker.

The PSE plans to form partnerships with more fintechs to enable stock trading in their applications, Monzon said.