Facts about the Philippine Stock Exchange (PSE)
September 9, 2008
Back in March this year, our class visited the trading floor of the Philippine Stock Exchange in Ortigas. Earlier today, we went to the “other” PSE office — the one in Ayala Avenue, Makati.
Tours of the PSE are for free but must be scheduled weeks ahead. Normally, PSE tours are held in the Ortigas floor but thanks to connections (ehem!), we were able to set foot in the PSE Makati floor.
The Makati trading floor is located in the PSE Plaza inside the Ayala Tower One building in Makati. It is where Pres. Gloria Macapagal-Arroyo and other dignitaries visit to ring the trading bell and is also the location of some segments of ABS-CBN News Channel’s business news program Mornings @ ANC.
Below are pictures of the PSE Makati trading floor. Just like in the PSE Ortigas trading floor, there are no shouting or commotion among brokers unlike in the trading floors of the New York Stock Exchange.
During our visit, we learned a few interesting things about the PSE. Here are some of them.
The Philippine Stock Exchange that we know now is a product of the merger of two separate entities, the Manila Stock Exchange (MSE) which was established in March 1927 and the Makati Stock Exchange (MkSE) which began operations in May 1963. Prior to the merger, each stock exchange used different prices for the same stock, causing traders to profit from price differences. Now under the PSE, both trading floors utilize only one price for the same stock, despite being located in two separate venues.
Binondo in Manila used to be the original location of the Manila Stock Exchange. It transferred to the Tektite Tower in Ortigas, Pasig in 1992. The Makati Stock Exchange, on the other hand, has always been in Ayala, but it has already changed venues thrice. Its first trading floor was inside the Insular Life Building, then in 1971, moved to the Makati Stock Exchange building. Recently it transferred to the Ayala Tower One building where it is now called the PSE Plaza.
The PSE is expected to move again to a new location by 2012. The new PSE building, to be built along Fifth Avenue inside The Fort Global City, is expected to have both the MSE and the MkSE. If pursued, this will mark the very first time both exchanges will be housed under one roof.
Back in the days when computerized systems still don’t exist, traders use chalk and blackboards to process transactions. Orders are “posted” on the blackboard and traders literally shout their bid or ask orders. Imagine how chaotic those trading times were!
The PSE currently uses the Maktrade trading system which processes brokers’ orders but starting next year, it is set to adopt the Euronext trading system.
The launch of the new trading system is slated on June 30, 2009 and will coincide with the start of extended trading hours. Right now, the PSE operates only from 9:30 in the morning until 12:10 in the afternoon. The plan is to extend trading operations next year for two more hours, from 2 p.m. until 4 p.m.
Actually, the PSE already extended trading hours in 2001 by one and a half hours, from 1 to 2:30 p.m. However, the increase in trade volume did not compensate for the increase in operating cost and so the trading hours extension was eventually scrapped.
An interesting info we learned about publicly listed companies is that they are required to report to the PSE any material company-related news or development within 10 minutes after its occurence. This supposedly is meant to promote transparency in the market and ultimately protect investors. So if, say, the CEO of a listed company died, the firm must contact the PSE first before notifying the spouse about the death of the CEO. Talk about priorities, hehe.
There are ongoing discussions at present regarding the addition of new securities that will be traded on the Philippine Stock Exchange. Right now, common stocks and preferred stocks are predominantly the ones beng traded. If the proposals are approved, the PSE might soon see Real Estate Investment Trusts (REIT), Exchange-Traded Funds (ETF), and derivatives on the trading board.
To learn more about the PSE, visit their website or, better yet, schedule your own tour!
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