PSE to implement broker anonymity by 2015

Rappler.com
Starting in March 2015, broker identifiers for matched trades will no longer be visible to market participants – practice in most Asian markets in the last 15 years

BROKER ANONYMITY. The Philippine Stock Exchange will implement this beginning March of 2015.

MANILA, Philippines – Starting March 2015, the Philippine Stock Exchange (PSE) will start implementing broker anonymity, “the practice of not showing the broker identifiers for trading matched at the trading engine.”

This is to align the bourse with practices in most market overseas, like Japan, Korea, Malaysia, Singapore, and Thailand in the last 15 years.

“Many markets have moved to this regime in order to attract more participants in the market and improve liquidity,” a PSE media release said on Monday, January 27.

Withholding the identify of brokers who post and match orders prevents the so-called “herding” mentality, the PSE said, and “usually translates into tighter spreads.” It cites studies that suggest markets that have adopted broker anonymity “have shown reduced bid-ask spreads.”

In current practice, broker IDs are not displayed pre-trade or when orders are still being queued. But once orders are matched, the broker IDs of the executing brokers become visible.

“Trading anonymously is just one of the many best practices that the PSE will be adopting to realize its vision of being a stock exchange with world class standards. And with all the interest that the Philippine market is getting, it is high time that we have guidelines in place to attract more foreign investors and make them comfortable in investing in our market,” said PSE president and CEO Hans Sicat.

To help traders and investors adjust to the new system, the PSE will implement a two-phase transition. During the first phase, which will take effect in March 2014, only the brokers and their systems will be able to see the brokers’ IDs in matched trades.

By March 2015, the start of the second phase, all broker identifiers will be anonymous to all market participants.

“We hope that our market participants and investors will see the medium to long term advantages of adopting broker anonymity. The transition period is aimed at helping market players adjust to the practice before we move to the full implementation of broker anonymity in 2015,” Sicat added.  Rappler.com