MANILA, Philippines—The Philippine
Stock Exchange will make it easier for investors to cast their stock trade
orders by opening up direct market access (DMA) in the local bourse, in line
with the general practice across the region.
DMA is an arrangement whereby a trading
participant’s client is permitted to enter orders to buy or sell securities
directly into the PSE trading system—or PSEtrade—for queuing and matching
without any manual intervention by the broker.
“We hope the introduction of DMA in the
Philippine stock market through our trading participants will significantly
boost volumes through faster execution of trades. DMA is being offered in
various markets such as Malaysia, Singapore and Hong Kong. The introduction of
DMA should also complement our efforts to promote online trading, thus giving
investors in the local stock market several options and channels by which to
participate in the growth of Philippine-listed firms,” PSE president Hans Sicat
said in a press statement on Wednesday.
To govern this activity, the PSE has
proposed rules to provide the regulatory framework for the provision by trading
participants of DMA services. Types of DMA services include automatic order
routing (AOR) and sponsored access. Some trading participants currently offer
online trading, which is a form of DMA service.
AOR is a type of DMA service wherein a
trading participant permits its clients to send orders electronically to the
trading participant’s infrastructure, which in turn automatically sends the
order to the PSEtrade. The two types of AOR are Internet trading and straight
through processing (STP).
Internet trading DMA is available for
clients using a web-based trading application provided by the trading
participant. STP, on the other hand, is available to a client if it uses an
order execution system whether provided by the trading participant or a
third-party service provider that is directly connected to the trading
participant’s infrastructure.
Another type of DMA service is
sponsored access, which is when a trading participant permits a client to
transmit orders for execution directly to the PSEtrade without passing through
the trading participant’s infrastructure.
The proposed rules seek to lay down
certain requirements that trading participants and clients must comply with in
order to address potential risks associated with DMA trading.
All concerned parties may send their
comments to the proposed rules posted on www.pse.com.ph not later than 5 p.m.
of September 7.
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