Short-selling okayed by regulators – PSE
THE Philippine Stock Exchange (PSE) has secured Securities and Exchange Commission (SEC) approval to introduce short-selling.
In a statement, the bourse said regulators had green-lit proposed guidelines that included provisions on eligible securities and transaction procedures, among others.
“We are grateful to the SEC for approving the guidelines for short-selling,” PSE President and CEO Ramon Monzon said.
“We are optimistic that this facility will lend support to our securities borrowing and lending program and help improve liquidity in our market,” he added.
Short-selling, the PSE has said, will allow investors to hedge risks. In practice, it involves borrowing shares of stock, selling and then betting on a price drop, which means profits for the investor.
Under the rules, the only securities eligible for short-selling are those in the 30-member Philippine Stock Exchange index and exchange traded funds, and only 10 percent of their outstanding shares can be sorted.
Brokerage firms will also have to ensure that clients have entered into the necessary borrowing arrangements, which must adhere to existing SEC, PSE and Bureau of Internal Revenue rules, before executing a short-selling order.
“Since this is the first time we are introducing short-selling, our guidelines were crafted with the goal of ensuring that short selling transactions are transparent and effectively monitored,” Monzon said.
“Even with a limited number of eligible securities and a cap on short interest to begin with, we believe that the ability to take short positions will further spur trading activity and attract more investors to our market,” he added.
The PSE said it would be conducting various activities to inform the investing public about short-selling rules and guidelines.
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