7 Facts about the PSE You Probably Didn’t Know

James Ryan Jonas

At present, the Philippine Stock Exchange (PSE) has trading floors both in Ayala, Makati and in Ortigas, Pasig City. This is about to change soon.

But first, more info about these two stock exchange locations. The Makati trading floor is located at the PSE Plaza inside Ayala Tower One building. It is where Presidents of the Philippines visit to ring the trading bell and is also the location of some segments of ABS-CBN News Channel’s (ANC) morning show Mornings @ ANC.

The Pasig trading floor, meanwhile, is located at the Tektite Building (also called PSE Center) at the Exchange Road in Ortigas Center. In August 2017, the PSE announced it has sold its Tektite office spaces and parking slots to Philippine Realty and Holdings Corp. for P257 million.

Why are there two separate PSE trading floors in the first place? Is it true that the PSE is moving to BGC soon?

Here are the answers to those questions and a few other interesting facts about the PSE.

1. There’s no more shouting or commotion in the trading floors

In several Hollywood movies that feature Wall Street, we usually see a lot of action in the stock trading floor. Traders are constantly on the move, always talking on their cellphones, and shouting orders at the top of their voice.

If you’re going to visit the PSE trading floors now expecting to see Hollywood-esque trading action, you’ll be in for a disappointment. There’s none of that anymore.

The simple reason: stock trading orders are now inputted in computer terminals and merely processed online. When we previously had a tour of the PSE, the actual trading floor was relatively silent, with very, very few people manning their trading booths.

At one point, I even saw some traders sleeping on their trading desks during actual trading hours!

2. Stock orders were once written in blackboards

Back in the days when there was a lot of action in the trading floor, PSE traders use chalk and blackboards to process transactions. Yup, chalk and blackboards!

Traders would post their orders on the blackboards — which is why, until now even with online trading platforms, it’s called “posting” orders. Traders literally shout their bid and ask orders. They negotiate and haggle prices and when transactions are completed, the processed orders are literally erased from the board.

Imagine how chaotic — but exciting — those trading times were!

3. The PSE came from the merger of two stock exchanges

The Philippine Stock Exchange that we know now is actually 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.

Binondo, Manila used to be the original location of the older Manila Stock Exchange. It transferred to the Tektite Tower (also called the PSE Center) in Ortigas, Pasig in 1992.

The Makati Stock Exchange, meanwhile, has always been in Ayala, Makati but has already changed venues thrice. Its first trading floor was inside the Insular Life Building along Ayala Avenue, then moved to the Makati Stock Exchange building in 1971. It again moved to its now current location which is the Ayala Tower One building also in Ayala Avenue.

4. Traded stocks used to have two different prices

Prior to the merger, the two stock exchanges operated separately, with each stock exchange using different prices for the same stock!

Imagine PLDT (TEL) being sold for P100.00 in the Manila Stock Exchange, while it’s trading at P110.00 at the Makati Stock Exchange. That sometimes happens and you can expect a trader to buy the stock from one exchange and to sell it immediately in the other exchange. A lot of traders indeed profited from the price difference.

That’s one of the reasons why the merger was pursued. Now under the PSE, both trading floors utilize only one price for the same stock, despite being located in two separate venues.

5. PSE trading hours were previously one of the shortest in the world

At present, the PSE trading hours are from 9:30 AM to 3:30 PM. But these trading hours are actually relatively new, having been approved and implemented only in 2009.

Prior to 2009, stock trading in the PSE was from 9:30 AM to 12:00 noon. These trading hours — only 2.5 hours — were said to be one of the shortest trading hours in the world.

Another trivia: in 2001, the PSE experimented with extended trading hours, adding one and a half more hours, from 1:00 to 2:30 PM.

12 noon to 1:00 PM was assigned as break, but some traders simply had long lunch breaks and decided not to resume trading after 1:00 PM. The PSE saw that the extended trading did not result in a profitable increase in trade volume, which is why the trading hours extension was eventually scrapped.

6. PSE implements a strict 10-minute disclosure rule

Companies with stocks traded in the PSE are required to abide by several stringent policies, including the infamous 10-minute disclosure rule.

This means publicly listed companies are required to report to the PSE any material company-related news or development within 10 minutes after its occurrence. This 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 and inform the PSE first before notifying the spouse about the death of the CEO. Talk about priorities LOL.

7. The PSE will soon move to Bonifacio Global City (BGC)

With the sale of the Ortigas property complete, the PSE is set to transfer soon to its brand new location at the Bonifacio Global City (BGC).

The PSE building is located in the prime One Bonifacio High Street block along 5th Avenue. Completion of the building and official transfer of the PSE is expected in either end-2017 or in 2018.

The 26-story PSE building is said to cost P800 million and will offer 6,400 square meters of office space. It will, of course, house a trading floor, plus the offices of stock brokerage firms and other companies in the Philippines.

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James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.