Philippine Stock Exchange forges tieup with Shenzhen bourse

MANILA, Philippines - The Philippine Stock Exchange (PSE) has forged an agreement with Shenzhen Stock Exchange on mutual cooperation.

The PSE said the agreement includes “sharing of information and experience on volumes, market price indicators, market data management, annual reports, auditors’ reports and financial statements of listed companies and rules and regulations for listing, trading, as well as other matters as may be agreed upon by the parties.”

Last February, the PSE entered into an agreement to create a trading linkage with other bourses in the Southeast Asian region and pave the way for the cross border trading of securities.

Aside from the PSE, other ASEAN members include Bursa Malaysia (BM), Ho Chi Minh Stock Exchange (HOSE), Indonesia Stock Exchange (IDX), Singapore Exchange (SGX) and the Stock Exchange of Thailand (SET).

Under the proposed agreement, all participating exchanges will commit to electronically link member exchanges and set up the ASEAN Board, a bulletin board that will provide real-time market data of securities from each exchange. Each exchange shall provide a list of 30 securities following an agreed-upon criteria.

With the ASEAN trading board, investors from other ASEAN countries can buy or sell ASEAN-listed securities through their local brokers.

The linkage will be launched in 2010 and will be pioneered in Malaysia and the Stock Exchange of Thailand, followed by the Singapore Exchange and the Philippine Stock Exchange.

PSE president Francis Lim earlier said strategic alliances among exchanges may be a way for Asian exchanges to create value in the increasingly competitive marketplace and a step towards building an integrated and stronger ASEAN stock market.

The urgency of developing linkages among ASEAN exchanges arises mainly from global pressures that could make small exchanges irrelevant in the global financial market arena. Over the past years, various exchanges have been consolidating through direct buyouts, exchanges taking a stake in another, or through the creation of various forms of alliances, including trading linkages.

Earlier studies showed that Asian exchanges’ share of trading typically account for less than 20 percent of global trading volumes.

More companies will seek alternative pools of liquidity if domestic exchanges cannot satisfy their need for greater liquidity and connectivity to a larger network of traders and investors.

Liquidity is vital to the development of a stock market. Markets with higher levels of liquidity tend to have higher stock valuations.

Market linkages are also expected to help broaden product offerings for investors and generate greater international interest in Asian securities.

“Our aim here is to take little steps in making the PSE global while expanding our investor base internationally. This has been one of the many initiatives we in the PSE have been working on in the light of a wide range of innovations that we have also pushed forward,” Lim earlier said.