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Economy

PSE to close trading floor

Jun 20, 2022, 8:26 AM
Rose De La Cruz

Rose De La Cruz

Writer/Columnist

Historically there were two bourses—Manila and Makati Stock Exchanges. These were merged in 1992 and became the Philippine Stock Exchange (PSE). Now the trading floor of PSE will soon be closed by June 24—this Friday—because brokers have become used to online trading since the pandemic began in December 2020.

Several stock traders have gotten used to “trading from home,” a reality that prompted the Philippine Stock Exchange to consider closing permanently the trading floor on Friday, June 24.

Traders said there will be little impact as they are now adept at remote trading ever since the pandemic started in 2020.

“The pandemic brought out and proved the possibility of floorless trading was efficient and viable. It was imminent but it would not have been that fast, the pandemic was a catalyst that accelerated the move to go floorless,” R.S. Lim and Company, Inc. nominee and former PSE director Alejandro T. Yu said in an interview with Business World.

In an advisory on June 10, the PSE announced that it will shift to floorless trading, citing the technological advancements have made this trading setup “efficient and responsive to the needs of the investing public.”

‘Don’t need a trading floor’

PSE President and Chief Executive Officer Ramon S. Monzon has said only a third of brokers renewed their lease on the trading floor amid the pandemic.

“We had about 85 brokers that were trading on the floor but since the pandemic, when the time for lease renewal came up, only 29 renewed their leases. And of the 29, every day there are about nine to 10 participants that use the floor. Obviously, it has reflected the fact that we don’t need a trading floor,”Monzon told ANC.

He pointed out that the Philippines is the only stock market in the ASEAN that still operates a trading floor.

“We are able to prove during the pandemic we can go on floorless trading,” he said.

When the coronavirus pandemic struck in 2020, Yu said that traders learned to set up shop from home.

“We can work from home, trade from whenever. The writing became clearer on the wall that the floor has become redundant. After the Omicron surge, that drove the final nail in the coffin,” he said, referring to the strict lockdown implemented in January to combat the Omicron-led surge in coronavirus cases.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said that the shift to “floorless trading” will have a minimal impact as traders have gotten used to trading from home.

Trading online

“It was during the pandemic that traders shifted to trading online and have already gotten used to this setup,” he added.

Marc Kebinson L. Lood, head of online trading at Timson Securities, Inc., said that the pandemic has accelerated the push to digitalize all sectors, including the capital market.

“The majority of our neighboring markets do not have a trading floor and operate entirely digitally. During the lockdown, it only took a few days for the PSE to transition to floorless trading, and trading is relatively seamless even when the trading floor is not able to operate,” Lood said.

“Investors are still taking direction from the fundamentals of the company and the market as a whole, and they are unworried about the trading floor’s closure.”

Digital world

First Metro Investment Corp. Head of Research Cristina S. Ulang said the trading floor’s closure reflects the increasingly digital world.

“It’s a new ecosystem emerging for the capital markets where brick and mortar could become more muted and subdued. Just look at e-commerce which is now competing with brick-and-mortar shopping,” she said.

The pandemic also encouraged more retail investors to enter the stock market.

Online stock market accounts rose by 23.8 percent to 1.16 million in 2021, PSE data showed. These made up over 70 percent of the total stock market accounts. Online investors also accounted for 74.7 percent of total trades in 2021.

Innovations

“Innovations are the order of the day. It is on the horizon as people are gradually shifting this move. I think PSE should be a strong forefront of this and develop platforms and applications that will make trading online easier,” Yu said.

Monzon said the trading floor will likely be used as office space or as an events venue.

“I want to assure you our trading floor is going to remain open because we will continue to have a lot of bell ringing ceremonies,” he said.

Tags: #PSE, #closureoftradingflooronJune24, #onlinestocktrading, #pandemic


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