PSE fine tunes ‘blackout provision’

The Philippine Stock Exchange (PSE) is fine-tuning the "blackout provision" it proposes to implement this year as a safeguard against the notably growing cases of insider trading on listed stocks, officials said.

Trisha Zamesa, head of the PSE’s disclosure department, said they are still in the process of evaluating when the blackout provision could be imposed, noting that it would be very difficult to determine the applicability of such a rule given the nature of corporate negotiations.

A blackout provision restricts top officials of listed companies (board of directors, major shareholders and management) to trade (buy or sell) in their stocks within a certain period prior to public disclosure of any particular information such as earnings report, mergers, acquisitions, or sale, among others.

The rule would limit, if not eliminate, cases of alleged insider trading which have hogged the headlines in several issues over the past two years.

Zamesa said in order to determine the leeway period in the blackout provision, they need to first determine certain aspects as to when the information is beginning to firm up, including an indicative price if these are cases of sale or purchases.

She cited that in some stock exchanges, the blackout rule is implemented one month before the release of quarterly or annual financial results of a listed company, which in the PSE’s case, could be adopted since the time period is well-defined.

During the PSE roadshow last Sept. 16, PSE president Ernest Leung said the exchange would put in place the blackout provisions and other stricter rules including higher penalties for disclosure violations.

Leung said these measures would not only provide a level playing field for investors but also build up the integrity of the PSE and its listed firms to the local and international business community as well. – Conrado Diaz Jr.