New PSE trading rules
July 21, 2010
After months of delay, the Philippine Stock Exchange (PSE) is set to launch its New Trading System (NTS) starting July 26, 2010.
The NTS will replace the current Maktrade system used by the PSE since 1993. The new system alongside the extension of trading hours, was to be rolled out originally in June 2009 but was postponed to October 2009 then deferred again due to technical and regulatory issues.
The NTS will use a trading software product developed by NYSE Technologies SAS, a wholly-owned subsidiary of NYSE Euronext which, in turn, operates the largest exchanges around the world including the New York Stock Exchange and Euronext.
Under the PSE’s New Trading System, the following major changes will take effect.
Currently, trading hours are divided into:
- 9:00 am to 9:30 am – Pre-Open
- Orders can be entered but matching will not yet occur.
- 9:30 am to 12:00 pm – Open Period
- The Exchange is accepting orders and matching is occurring.
- 12:00 pm to 12:10 pm – Run-off Period
- Not accepting orders but matching of remaining trades is occurring.
- 12:10 pm – Market Close
- Closed with no ordering and matching allowed.
Under the NTS, the new market phases are:
- 9:00 am to 9:30 am – Market Pre-Open
- Orders can be entered but there will still be no matching. No cancellation will be allowed.
- 9:30 am to 11:57 am – Continuous Trading
- All orders are automatically matched as soon as they enter the order book and a counterpart is found.
- 11:57 am to 11:59 am – Market Pre-Close / No Cancellation Period
- Modification and cancellation of orders are restricted.
- 12:00 pm to 12:10 pm – Trading-at-Last
- Matching is executed only at a fixed price, which is the closing price determined at the Market Pre-Close.
There is also a proposal to extend trading hours until 4 pm but, for the meantime, trading will remain in the morning.
Opening and Closing Prices
Both Opening and Closing prices will be calculated by the NTS, taking into account the volumes of the matched and unmatched orders, market pressure and the last traded price.
New Board Lot Table
The PSE uses a Board Lot table that specifies the minimum number of shares one can buy or sell at a specific price range. How to use the PSE Board Lot is explained in this stock tutorial article. Under the NTS, the new Board Lot table is as follows:
|Price||Minimum Fluctuations (Tick Size)||Lot Size|
|0.0001 - 0.0099||0.0001||1,000,000|
|0.0100 - 0.0490||0.0010||100,000|
|0.0500 - 0.2490||0.0010||10,000|
|0.2500 - 0.4950||0.0050||10,000|
|0.5000 - 4.9900||0.0100||1,000|
|5.0000 - 9.9900||0.0100||100|
|10.0000 - 19.9800||0.0200||100|
|20.0000 - 49.9500||0.0500||100|
|50.0000 - 99.9500||0.0500||10|
|100.0000 - 199.9000||0.1000||10|
|200.0000 - 499.8000||0.2000||10|
|500.0000 - 999.5000||0.5000||10|
|1,000.0000 - 1,999.0000||1.0000||5|
|2,000.0000 - 4,998.0000||2.0000||5|
|5,000.0000 - up||5.0000||5|
Normal and Oddlot Markets
There will be two separate and independent market segments under the NTS: the Main Market and the Oddlot Market. One security is defined separately in the Oddlot Market and Normal Market and will have its own Bid/Offer prices.
The Main Market is equivalent to the Main Board in the current trading system. This is where Board lot orders will be traded. The Oddlot Market is equivalent to the Odd Lot Board in the current trading system. This is where orders with volume or quantity less than the defined Board lot will be traded.
For BPITrade users, stocks to be traded in the Normal Market will be prefixed with N, for example:
- MER (Meralco) becomes NMER
- NI (Nihao) becomes NNI
- I (iRemit) becomes NI
Similarly, stocks to be traded in the Oddlot Market will be prefixed with O, for example:
- MER (Meralco) becomes OMER
- OV (Philodrill) becomes OOV
- V (Vantage) becomes OV
Other online stockbrokers might be using a different system so just check with your broker. Next week, we’ll find out if the transition will be smooth and whether traders will like the new trading system.
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