PSE may implement broker anonymity this year

MANILA, Philippines – The Philippine Stock Exchange said Thursday, February 27 it is evaluating the possible implementation of broker anonymity this year, ahead of its original planned rollout of March 2015.

“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 chief executive Hans Sicat said in a statement.

Broker anonymity refers to the practice of not showing the broker identifiers involved in trades matched at the PSE trading engine. This is being done in most markets overseas like Japan, Korea, Malaysia, Singapore and Thailand in the last 15 years.

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.

Aside from early implementation, PSE said it is dropping a plan to implement the program in phases.

“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,” Sicat said.

“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,” he added. – Rappler.com