PSE drafts new rules to allow extended trading hours

The Philippine Stock Exchange (PSE) is drafting new rules that would allow the extension of trading hours up to 4 p.m daily.

The move followed the approval by the PSE board of a proposal to lengthen the trading session from the present 9:30 a.m. to noon schedule. The rules, however, are atill subject to the approval of the PSE board and the Securities and Exchange Commission.

Under the proposed rules, the local bourse will resume trading from 2 p.m. to 4 p.m. after a two-hour break from 12 noon.

The draft rules also state that the PSE may effect changes to the hours and schedule of a session as the circumstances warrant.

The PSE earlier said it was hoping to implement the extended trading session on or before June 30, 2009 simultaneous with the launch of a new trading system it acquired.

PSE president Francis Lim said the extension of the trading session is in line with efforts to boost turnover volume, give foreign investors a bigger window to enter and leave the country’s stock market and put the local bourse at par with other exchanges worldwide.

“The decision of our board to extend trading is part of a coordinated strategy to level our exchange with our peers in the region and develop our local stock market to its full potential. It is also a response to observations from foreign investors who pointed out that since the Philippine stock market is small, they first look at the bigger markets in the morning but by the time they get the opportunity to look at our market, the PSE is already closing, so why bother at all,” he earlier said.

“Some foreign investors also pointed out that the PSE should realize that the world is very fluid now. If the trading session is in the morning only, they cannot respond to developments that happen in the afternoon,” Lim added.

He said the extension of trading is also aimed at preparing the local exchange to take full advantage of market-friendly legislations which include the Personal Equity Retirement Account (PERA) Law.

The PERA Law, which is aimed at encouraging Filipinos to set aside money for their retirement, gives tax incentives to people who invest in the stock market.

“With the extended trading hours, overseas Filipino workers in the Middle East can now catch our market live through our online brokers.And they can invest in our market with special incentives they will get from the newly-enacted PERA Law,” Lim pointed out.

In 2002, the PSE experimented with an extended trading period by stretching it by an hour and a half, only to revert back to the old schedule after eight months due to higher costs. “Times have changed. We have to consider also that markets are much different now as trading has become more global. But we decided to implement the extended trading hours next year to give the PSE market players enough time to make necessary adjustments in their operations,” he said.