PSE addresses technical issues after major glitch

MANILA, Philippines - The Philippine Stock Exchange Inc. (PSE) has put in place measures to restore normal operations in the local equities market.

 This after the Securities and Exchange Commission (SEC) asked the PSE to explain the reasons behind the technical glitches that resulted in the imposition of temporary trading halts on Aug. 18, 24 and 25.

“The exchange put in place measures to restore normal operations in the market.  As an exchange operator, it is our goal to ensure the availability of our systems for our stakeholders,” PSE president and CEO Hans Sicat said.

 Of the three times that trading was halted, the longest was on Aug. 25 when the PSE put the breaks on trading for nearly five hours or from 10:02 a.m. to 2:55 p.m. after technical issues were noted on the transmission of trading data in the front end trading terminals of the PSE.

 Sicat said that while the trading engine provided by NASDAQ was fully functioning, the front end trading terminals used by trading participants as their primary order execution interface or as their back-up system were experiencing technical issues.

 “The exchange is cognizant of the impact of these technical problems to the investing public and the various stakeholders. The PSE exerted all efforts to resolve the technical issues with utmost urgency and we appreciate the understanding extended to us. We continue to monitor the situation with an eye to avert similar incidents from happening in the future,” Sicat said.

Sicat likewise reiterated that the decline of the index was not the reason behind the trading halt.

“Even on occasions of extreme volatilities, markets should settle by themselves. Halts only come into play once circuit breakers are triggered,” Sicat said.

The SEC for its part has ordered the PSE to submit today (Aug. 28) a full and thorough report on these glitches and trading halts.

It also directed PSE trading participants to submit their risk-based capital adequacy (RBCA) requirements as of Aug. 24.

The RBCA requirements pertain to the minimum required liquid reserves to protect the firms, their investors, customers and the economy as a whole. The RBCA requirements ensure that the broker dealers have enough capital to sustain operating losses while maintaining a safe and efficient market.

Under the SEC rules, broker-dealers are required to compute daily their RBCA ratio and financial requirements and to submit monthly an RBCA report.