PSE sets guidelines on stock market trading during disasters

TRADING at the stock market is automatically canceled if Metro Manila is placed under Tropical Cyclone Wind Signal (TCWS) No. 3 or higher, according to new rules issued by the Philippine Stock Exchange, Inc. (PSE).

There will be no stock market trading if the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) raises TCWS Nos. 3, 4, or 5 in the National Capital Region (NCR), the PSE said in its new guidelines on natural disasters or extraordinary circumstances released on Wednesday.

Meanwhile, the regular trading schedule will be followed if PAGASA issues TCWS Nos. 1 or 2 in NCR.

Trading will proceed if PAGASA downgrades the TCWS in NCR to Nos. 1 or 2 from a higher level by 6 a.m. of the following trading day.

On the other hand, trading will be canceled if PAGASA maintains the TCWS in NCR at Signal No. 3 or higher by 6 a.m. of the next day.

Meanwhile, under amendments to existing rules, the PSE now also has the discretion to halt, suspend or cancel a scheduled trading day in the case of an emergency situation, including fire, earthquake, eruption, flood, heavy rainfall, civil commotion, terrorist attack, and other circumstances that would require evacuation from or prevents employees from re-entering the PSE premises.

A trading halt can also be triggered if participants accounting for over 50% of average daily trading value for the past six months are unable to access the trading system. This is higher than the previous threshold of one-third of trading participants.

“The exchange shall immediately notify the Securities and Exchange Commission (SEC) of its decision to halt, suspend or cancel a scheduled trading day,” it said.

It added that all trading participants are given two months to select a correspondent trading participant as part of their business continuity requirement.

The PSE will also implement a market halt if the trading participants are unable to trade through their correspondent trading participant. 

The new and updated guidelines have been approved by the SEC, the PSE said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the PSE guidelines ensure that there are contingency plans for the local bourse.

“The guidelines allow for greater predictability of trading activities for the investing public, both local and foreign,” Mr. Ricafort said.

“It also helps us align with global best practices.”

On Wednesday, the benchmark PSE index inched up 0.20 point to close at 6,277.87, while the broader all shares index fell by 0.07% or 2.76 points to 3,735.14. — Revin Mikhael D. Ochave