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The Philippine Stock Exchange (PSE) has announced that it has finalized the rules
to allow listing and trading of issues in both Philippine peso and the US dollar.
This is not a new idea. In 2002 the idea was finalized and apparently started
trading in 2003. The trading and settlement with dollar denominations was
intended to be strictly for offshore issues listed on foreign exchanges, such as in
the US, Canada, Hong Kong and the UK. The volume and results of that program
are unknown, as all information on the success or failure has disappeared or was
never widely available
Back in the days before the consolidation of the Makati Stock Exchange and the
Manila Stock Exchange, traders were transacting profitable trades by using price
arbitrage between the two exchanges. As issues were traded on both markets, often
there were times that the price for the same stock was different on both exchanges.
Most of the time, the price differential was minimal. However, there were times
that a person could buy on one market and simultaneously sell on the other for a
profit. That is a form of arbitrage trading.
The Philippine Stock Exchange (PSE) has announced that it has finalized the rules
to allow listing and trading of issues in both Philippine peso and the US dollar.
This is not a new idea. In 2002 the idea was finalized and apparently started
trading in 2003. The trading and settlement with dollar denominations was
intended to be strictly for offshore issues listed on foreign exchanges, such as in
the US, Canada, Hong Kong and the UK. The volume and results of that program
are unknown, as all information on the success or failure has disappeared or was
never widely available.
But before you get too excited, understand that DDS will only apply to local
companies when they issue a new set of securities either common or preferred
shares. For example, food conglomerate Del Monte Pacific Ltd. intends to issue up
to $360 million in US-dollar denominated preferred shares early next year.
The trading, pricing and settlement details of the DDS are that the dollar price will
be determined by the previous day’s closing price on the Philippine Dealing
System. Any currency rate changes today will not take effect until tomorrow.
ROLE:
The PSE bring together companies which aim to raise capital through the
issue of new securities. Through the listing of their share in the stock
exchange, companies can have easier access to funds. Raising new capital
through an additional public offering is easier and less expensive when the
company is already listed in the Exchange. Therefore, the PSE plays a vital
role in the financing of productive enterprises that use the funds for
growth and expansion of new jobs. It is therefore essential to the growth of
the Philippine economy.
Furthermore, the PSE facilitates the selling and buying of the issued stocks
and warrants. It provides a suitable market for the trading of securities to
individuals and organizations seeking to invest their saving or excess funds
through the purchase of securities.
Apart from these functions, the PSE has committed itself to (a) protecting the
interest of the investing public; and (b) developing and maintaining an
efficient, fair, orderly and transparent market.
Efficient This means that orders are executed and transactions are settled in
the fastest possible way. Some reforms have been instituted or are being carried
out by the PSE to make the market more efficient, such as:
· installation of fully automated trading system;
· installation of computer trading terminals in cities outside
Metro Manila to encourage the entry of provincial investors;
and creation of a central cleaning and depository system to
mobilized stock certificates and allow transfer of shares and
funds by book entry.
Fair This means that the PSE assures that no investor will have an undue
advantage over another ,market player in trading by manipulating prices and
engaging into insider trading. Insider trading is the act of buying or selling a
particular stock based on certain privileged information which is not available
to the public. As such it is considered as illegal and prohibited by the PSE.
Market Transparency Transparency proceeds from the assumption that the
investor can only make informed and intelligent information about the
particular sock he wants to buy. The PSE requires listed companies to disclose
timely, complete and accurate material information to the Exchange and the
public on a regular basis. Such information would include stock price
information, corporate conditions and developments which tend to affect stock
prices like dividend, mergers and joint ventures, and the like.
Sources:
https://en.wikipedia.org/wiki/Philippine_Stock_Exchange
https://tradingeconomics.com/philippines/stock-market
http://fglinc.tripod.com/knowstockex.htm
https://businessmirror.com.ph/2016/12/08/philippine-stocks-in-us-dollars/
https://aseanup.com/top-30-companies-philippines-psei/