Philippine Stock Exchange New Trading Rules Effective July 26, 2010

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For those who are invested or planning to invest in the Philippine Stock Market, here’s something you should know.

Effective Monday, 26 July 2010, the Philippine Stock Exchange will be implementing a new trading system with a new set of trading rules.

This is part of PSE’s commitment to enhance the trading experience and support systems for all investors, trading participants and PSE support groups.

The important changes to the Trading Rules that could immediately affect your trading activities are:

A. New Trading Schedule
There will now be a Pre-Close period prior to the Run-off Period of 12noon.

• 9:00 AM – Pre-Open *
• 9:30 AM – Market Open
• 11:57 PM – Pre-Close ** ~NEW
• 12:00 PM – Run-off / Trading at Last
• 12:10 PM – Market Close

* At Market Pre-Open, orders can now be placed but matching will not yet occur. However, modifying and canceling orders will not be allowed.

** At Market Pre-Close, matching will freeze for three minutes. Posting new orders will be allowed. However, cancellations and modifications to orders are only allowed from 11:57-11:58 thereafter only posting of new orders are allowed until 12:00.

B. New Board Lot and Price Fluctuation Table
The new board lot and price fluctuation table for all stocks listed in the PSE are as follows:

C. Implementation of Trading Price Limits
The price of an order shall be within the Trading Limits for the Trading day. There are two limits implemented; i.e., Static and Dynamic Thresholds.

The Static Threshold used to be known as the Floor and Ceiling Prices and is computed as follows:

• The upper Static Threshold shall be fifty percent (50%) above the Reference price (closing price)
• The lower Static Threshold shall be fifty percent (50%) below the Reference price (closing price)

The Dynamic Price Threshold** is computed as follows:

• Dynamic price threshold (upper) = last traded price + (last traded price multiplied by the dynamic tick)
• Dynamic price threshold (lower) = last traded price – (last traded price multiplied by the dynamic tick)

** An order entered breaching above or below the Dynamic Threshold will cause the security to be Frozen by the PSE stopping all trades until the PSE reactivates the security with a new Dynamic Threshold.

Example:
Stock A last traded price: P5.00 | PSE defined dynamic tick: 0.05
- Stock A dynamic price threshold (upper) = 5.00 + (5.00 x 0.05) = 5.25
- Stock A dynamic price threshold (lower) = 5.00 – (5.00 x 0.05) = 4.75

D. Closing Prices will now be calculated during the Pre-Close Period which will be similar to pre-opening calculations of the opening price.
Noon time will bring about a closing price that will match pre-close posted orders then continue trading at the closing price until 12:10.

E. Partial matching of Odd-lot orders will now be allowed.

F. Good-Till-Cancelled orders will now cover a period of seven (7) calendar days instead of seven (7) trading days.

For more information regarding these rules, you may contact your stock broker or visit the Philippine Stock Exchange website.

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If you have no real idea how the stock market works, maybe you could read this two-part article I wrote before:

• Explaining The Stock Market To A 12-Year Old Part 1
• Explaining The Stock Market To A 12-Year Old Part 2

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This entry was posted by Fitz Villafuerte on Monday, July 26th, 2010 at 1:56 am and is filed under General Information, Investing, News and Events. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. If it's your first time to comment here, they will be held for moderation. Off-topic responses may be deleted.