PSE told to explain trading halts much sooner
THE Philippine Stock Exchange (PSE) should promptly disclose the cause of trading halts to ensure confidence in local financial markets, analysts said at the weekend after the bourse halted trading for two hours on Jan. 3 due to a technical glitch.
“Prolonged trading halts are disruptive, so hopefully we do not see any recurrence,” Juan Paolo E. Colet, managing director at China Bank Capital Corp. said in a via Viber message. The PSE should have explained the glitch “much sooner.”
“They should have explained the situation much sooner. Timely disclosure of information is essential to financial markets, and this is something we have to keep in mind if we want to ensure confidence in our local stock market,” he added.
The PSE provided more details about the glitch in a statement two days later.
It said the Jan. 3 trading halt from 9:32 to 11:55 a.m. was due to a glitch encountered by its mobile trading application and its process of authenticating all accounts. This affected at least a third of trading participants.
The main index closed 0.8% lower.
“The technical problem encountered was the inability of at least one-third of the trading participants to connect to PSE’s front-end order management system and for some of these the trading participants, the inability to send orders to the trading system,” the PSE said.
The front-end order management system sends buy-and-sell orders for processing to the trading system.
The PSE said the issue happened in one of the four silos in the system, which experienced stalled processes given the iterative authentication steps.
The bourse and front-end order management system developer have implemented a design optimization on the mobile trading application and were working on further enhancements to prevent the issue from happening again, it added.
“The PSE remains steadfast in its commitment to engage with all stakeholders and service providers towards continuously improving and future-proofing its products, systems, and services for the investing public,” the market operator said.
Any disruption in the local bourse does not look good “especially from the point of view of international professional fund managers,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a Viber message.
“Reliability of the trading infrastructure is one of the criteria of international investors, especially the ability to freely buy or sell stocks during trading days,” he said. “This is also part of their market risk and operational risk assessment for investing in the local stock market.”
“The reliability, security, and integrity of the local stock market trading system and overall infrastructure would also determine the level of international investor confidence,” he added.
Technical issues also caused the PSE to open late in January 2023 and to cancel trading for an entire day in January 2022.
The bellwether Philippine Stock Exchange index on Friday gained 0.41% or 27.12 points to close at 6,629.64. The broader allshare index added 0.48% or 16.76 points to close at 3,502.52.