PSE mulls early implementation of broker anonymity
The Philippine Stock Exchange, Inc. (PSE) is evaluating the possible implementation of broker anonymity this year, earlier than the original planned roll-out of March 2015.
Broker anonymity refers to the practice of not showing the broker identifiers involved in trades matched at the PSE trading engine. Many markets have moved to this regime in order to attract more participants in the market and improve liquidity. Studies have shown broker anonymity to have positive effects on the market primarily by causing reduced bid-ask spreads.
“Since we announced our plan to move to a broker anonymous environment, we have been receiving positive feedback from market participants who see the move as a way to attract more investors to trade in our market. Implementing this program this year instead of next year will allow us to experience the upside from this change much earlier,” PSE President and CEO Hans B. Sicat explained.
Together with the move to advance the roll-out of broker anonymity, the PSE also announced that it is doing away with the earlier announced phased implementation of the program. Initially, the PSE was targeting the implementation of Phase 1 of broker anonymity in March 2014 which involves limiting the visibility of brokers IDs of matched trades only to brokers and their systems. By removing Phase 1, broker anonymity, once implemented, will make all broker identifiers anonymous to all market participants.
“Even as we are now planning to have broker anonymity implemented this year, we have to evaluate the readiness of the market and various systems for full broker anonymity under the reduced time frame to prepare for this change. We hope to finalize our study over the next weeks and make announcements on the final schedule shortly after that,” Mr. Sicat noted.
“We would like to assure the investing public that, much like in other markets abroad that have stopped displaying broker IDs for matched trades, surveillance operations will not be affected as regulators will continue to have access to information on broker IDs. The market oversight functions of the Capital Markets Integrity Corporation and the Securities Exchange Commission will not be impeded in any way under a full broker anonymity regime,” Mr. Sicat clarified.
Other markets that have adopted broker anonymity include markets in the US, Europe, Japan, Hong Kong, Singapore, Malaysia, Thailand, Australia and New Zealand.
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