Crisis in the stock market

Will there be trading in the stock market today? It's no holiday, but the Philippine Stock Exchange has just lost all the members of its compliance and surveillance group, which is needed for the PSE'S regular operation. Even before this piece of bad news was announced shortly before the close of trading yesterday, the market index had already dived by 51.58 points, partly because of rumors that the PSE's business conduct and ethics committee was set to clear several brokerage firms of insider trading and stock manipulation in the Best World Resources Corp. scandal.

Ruben Almadro, vice president of the compliance and surveillance group, all but confirmed the rumors when he resigned together with all the members of his group. In a letter to PSE president Jose Luis Yulo Jr., Almadro said he was resigning because "sham deliberations" by the ethics committee were apparently leading to "a systematic and last-minute exoneration" of some of the brokers implicated by his group in the BW scandal. "I am leaving the Exchange because this drift to the 'Old Boys Club' has created an unhealthy work environment which runs counter to my personal values and beliefs," Almadro wrote.

The resignations came amid questions raised by senators on Almadro's handling of the probe, which accused BW president Dante Tan of stock manipulation but cleared other heavy BW traders such as Almadro's former boss, ex-PSE head Wilson Sy. Almadro, who himself has been accused of protecting some members of the 'Old Boys Club' in the exchange, insists that his group found no proof of insider trading or stock manipulation by Sy's securities firm.

Whoever is telling the truth, the resignations only worsen the credibility crisis in the stock exchange, and dampen hopes of reforms even with the election of a new PSE board. This latest development makes Filipinos wonder if there's hope for the Philippine stock market, already one of the worst performers in the region. The stock exchange needs a drastic overhaul, but the biggest problem is who can do it. Certainly not the brokers, who have a disturbing tendency to protect their own. Not Malacañang, whose officials have a disturbing tendency to protect friends. If the Philippine stock market implodes, all of these players must share the blame.