'Off-trading' of foreign, local stocks proposed

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Posted: 7:47 AM | Jun. 13, 2006
Elizabeth L. Sanchez
Inquirer

THE PHILIPPINE Stock Exchange (PSE) said that it would be studying the proposal of a group of stock analysts to carry on the trading of local and foreign stocks outside of the local bourse's regular trading hours in the morning.

The proposed practice, which is also called "off-trading," was brought up by members of the Association of Securities Analysts of the Philippines (ASAP).

From Monday to Friday, the PSE conducts trade for less than three hours, or from 9:30 a.m. to 12:10 p.m.

ASAP director Astro del Castillo said that the organization revived its 1998 proposal for "off-trading" to take advantage of the increasing volumes being traded in the local and global markets.

Off-trading is also seen to maximize the potential benefits from cross-border listing between the PSE and foreign exchanges, such as the Stock Exchange of Singapore or the Australian Stock Exchange.

"We have to take advantage of the situation, given the surge in volumes," Del Castillo said. "If we don't put ourselves ahead of the pack, we will be left behind."

Net foreign buying in the stock market from January to May ballooned 109.6 percent to P25 billion, more than double the P11.9 billion recorded in the same period last year.

Average daily value turnover hit P2.03 billion in the first five months of the year, from P1.56 billion in 2005.

Currently, only a handful of brokers have online trading facilities that allow them to buy and sell Philippine stocks for investors in the United States or other Asian markets, and "cross" or formalize the transfer of shares at the PSE the next day.

Under the off-trading proposal, ASAP will encourage all brokers to create their own websites or tap into the PSE's trading terminals to minimize the cost of adding more personnel to conduct trades in the afternoon, Del Castillo said.

In 2002, the PSE tried to extend trading from 1:30 p.m. to 3 p.m. But due to weak volumes and increased costs, the PSE dropped the practice and returned to its morning schedule.

"It was an experiment, but the market conditions then were not conducive," PSE president Francis Lim said. "I have encouraged ASAP to study the matter further. Any measure is worth considering if it will boost volumes."