How much money do you need to start trading stocks in the Philippine Stock Exchange (PSE)? What is the minimum number of Globe Telecom (GLO), East West Bank (EW), or Megaworld (MEG) shares that you can buy or sell at a given time?
You probably don’t know it but these questions can be answered by looking at what is called the PSE Board Lot Table.
What is the PSE Board Lot Table?
The Board Lot table of the Philippine Stock Exchange (PSE) is a guide for investors that shows:
- the minimum number of shares that can be bought or sold at any given time; and
- the minimum price increments of each traded stock.
Here’s what the PSE Board Lot table looks like.
PSE Board Lot Table
|DOLLAR BALANCED FUNDS||Jan-Aug 2018 YTD Gain (Loss) %||Aug 2017-Aug 2018 1-Year Gain (Loss) %||3-year Gain (Loss) %||5-year Gain (Loss) %|
|1||Sun Life Prosperity Dollar Advantage Fund||1.18%||6.46%||6.42%||4.49%|
|2||Sun Life Prosperity Dollar Wellspring Fund||-1.51%||0.62%||No Data||No Data|
|3||Cocolife Dollar Fund Builder||-2.33%||-1.92%||-0.09%||2.84%|
|4||PAMI Asia Balanced Fund||-4.49%||-0.73%||4.92%||0.77%|
In the table above, the “Minimum Fluctuations in Price” column shows the allowed price change or tick size, depending on the stock’s current trading price.
Meanwhile, the “Minimum Number of Shares” column represents the Board Lot, or the minimum allowed number of shares that can be traded depending on the stock’s current price. We’ll see a clearer application of these items in our examples below.
For now, just take note that this table governs only “Normal Lot” trades in the PSE. The “Normal Lot” market is still slightly different from the “Odd Lot” market, which we will discuss in a separate article. Don’t worry for now because you’re most likely just “trading normally”, so you only need to understand the “Normal Lot” PSE Board Lot table.
How to Use the PSE Board Lot Table
The PSE Board Lot Table can be used to determine three things:
- (1) the minimum number of shares that can be traded for each stock;
- (2) the minimum price fluctuation or increment applicable to each stock; and
- (3) the minimum amount of money needed to buy any PSE-traded stock.
Let’s look at three examples showing the application of the Board Lot table.
1. Minimum Number of Shares that we can buy or sell
To know the minimum number of shares that can be bought or sold for each stock, follow these steps.
- Step 1: Get the current price of the stock. Let’s say you want to know the minimum number of shares of Globe Telecom (stock code: GLO) that you can buy or sell. Check the PSE website or your broker’s website to get GLO’s current price. Let’s say you checked and saw that it is currently trading at P2,200.00.
- Step 2: Check the row in the PSE Board Lot table corresponding to that stock price. GLO’s stock price of P2,200.00 corresponds to “Row N” in the Board Lot table. This is because the price falls within the range P2,000.00 to P4,998.00.
- Step 3: In that row, determine the Board Lot (Lot Size) for the stock. The lot size represents the minimum number of shares that can be traded for any stock.
In the case of GLO, the lot size is 5 — meaning, a minimum of five (5) shares of GLO can be bought or sold at any time. So can you buy 5 shares of GLO? Of course! Can you sell just 2 shares of GLO? No!
Can you sell 50 shares? Yes! Remember, the Lot Size shown is just minimum. The number of shares trades can be higher than 5, as long as the number of shares being traded is divisible by 5.
Easy, right? Let’s move on to the next application of the Board Lot table.
2. Minimum Price Increment or Fluctuation
Let’s say you want to sell your shares of SM Prime Holdings (stock code: SMPH). It currently trades at P36.15. Can you sell it at P36.08? How about at P36.25?
Here are the steps needed to know the price increment or fluctuation for any give PSE-traded stock. As you can see, this is useful if you want to input your own buying or selling price for a stock.
- Step 1: Get the current price of the stock. Just like in Example 1 above, you can check the PSE website or your broker’s website to get the current price of your stock. In the case of SMPH, let’s assume its current stock price is P36.15.
- Step 2: Check the row in the PSE Board Lot table corresponding to that stock price. If SMPH’s stock price is P36.15, which row in the Board Lot table corresponds to this price? If you answered “Row H”, you are correct. SMPH’s stock price is within the price range in that row, which is from P20.00 to P49.95, so we will use this row in Step 3.
- Step 3: Determine the Minimum Fluctuations (Tick Size) for that stock. The “Tick Size” column represents the minimum price change or increment for any given stock. Given the price of SMPH, the relevant row is “Row H” which shows that the tick size is PHP 0.05. This means prices to be used when trading SMPH must be in increments of or divisible by 0.05.
So, going back to the question earlier: can you sell SMPH at a price of P36.08? Since it’s not divisible by 0.05, this is not possible.
Can you sell it at P36.25? Yes! Since this price is divisible by 0.05, SMPH can be sold at this price! However, whether the sale will be a done trade will, of course, depend on the presence of buyers willing to purchase EW shares at this asking price.
3. Minimum Amount of Investment Needed to Buy Stocks
Now, a very useful application of the Board Lot table is in determining the minimum amount of money needed to start trading stocks. Actually in the PSE, there is no fixed minimum amount of money needed to start trading stocks. This minimum investment amount depends on the price of the stock and the minimum lot size.
Let’s see an example below. Let’s say we want to know how much we need to buy the minimum number of shares of Megaworld Corp. (stock code: MEG).
- Step 1: Get the current price of the stock. Again you can simply check the PSE website or your broker’s website to get the current price of your stock. In the case of MEG, let’s say it’s current price is P3.35.
- Step 2: Determine the lot size of that stock in the PSE Board Lot table. We need to know the minimum amount of MEG shares that can be traded. To do this, refer back to the step-by-step process explained in Example A above. Checking MEG in the Board Lot table, we see that its minimum lot size is 1,000 shares in “Row E”.
- Step 3: Multiply the current price with the minimum lot size. The product of the current price and a stock’s minimum lot size equals the minimum amount of money you need to buy that stock. In the case of MEG, this is P3.35 x 1,000 shares = P3,350.
This means you need P3,350 to start buying MEG shares. Wait, there’s more!
Take note that brokers charge certain fees and commissions so this amount will surely increase. Read our article on PSE Stock Trading Fees and Charges to find out what these specific fees and charges are.
Also, be informed that some stock brokers require that you fund your trading account a minimum amount of money before you can start trading. This amount is usually higher than the minimum amount of money you need to buy a particular stock. Find out the minimum amount needed to fund your broker’s trading account in the article Survey: Best Online Stock Brokers in the Philippines?.
Now you know how to use the PSE Board Lot table. Again, be reminded that this table is only applicable to trades using “Normal Lots”. In our next article, we’ll see an example of trading in the alternative market, the “Odd Lot” market.
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