PSE to revamp dynamic threshold rule

For easier trade execution

MANILA, Philippines — The Philippine Stock Exchange Inc. (PSE) plans to standardize the dynamic threshold to make execution simpler and easier for both the exchange and market participants.

The PSE has submitted for stakeholder comments its proposed amendments to the dynamic threshold rule, wherein it intends to replace the current three-tier dynamic threshold with a single 10 percent threshold for all securities, regardless of the frequency of trading.

However, similar to block sales, the PSE said the dynamic threshold would not be applied to negotiated trades and cross transactions.

The dynamic threshold under the PSE’s current rule is tiered at 20 percent, 15 percent or 10 percent, depending on the number of times a security was traded in the preceding six months.

The less frequently a security is traded, the higher its threshold, the PSE said.

The exchange said the proposed standardization of the dynamic threshold would optimize its operations by eliminating the semi-annual review of the dynamic threshold classification and the reclassifications in between review periods.

Further, the proposed amendment will align the PSE’s dynamic threshold with other ASEAN exchanges which implement dynamic thresholds.

Based on its benchmarking, only the PSE has a tiered dynamic threshold based on trading activity, with the Singapore Exchange implementing a uniform 10 percent dynamic limit, while Bursa Malaysia has a price-tiered dynamic price band.

Meanwhile, other ASEAN exchanges such as the Indonesian Stock Exchange, the Ho Chi Minh Stock Exchange and the Stock Exchange of Thailand no longer implement dynamic thresholds.

Still, the PSE said it is proposing to retain a dynamic threshold, although with a calibrated and single limit, “to act as speed bump against fat finger errors and sudden intraday price movements.”

The PSE has given all interested parties and concerned stakeholders until Nov. 19 to submit their comments on the proposed amendments to the dynamic threshold rule.