PSE clears regulatory hurdles to short selling

Regulatory hurdles to short selling will soon be addressed as the Philippine Stock Exchange Inc. (PSE) readies the amended rules on securities borrowing and lending (SBL).

- By RICHMOND MERCURIO

The PSE has submitted its proposed final rules on SBL to the Securities and Exchange Commission (SEC).

“This should address all regulatory hurdles to short selling and this long-overdue investment strategy,” PSE president and CEO Ramon Monzon said.

The PSE met with the SEC on May 6 to discuss the proposed amendments to the PSE rules on SBL.

The SEC has provided its comments, one of which is for the PSE to include the responsibilities of onshore custodians in the proposed SBL rules, citing the significant role they play in the proposed framework for directed pooled lending.

The SEC likewise asked the exchange to provide benchmarking that brokers and dealers normally function as SBL facilitators rather than as lending agents.

The commission also requested that the PSE provide an update on the proposed annex or supplement to the standard Global Master Securities Lending Agreement (GMSLA).

In the directed pooled lending framework proposed by the PSE, the onshore custodians, like the trading participants, will serve as agent-facilitators to expedite the execution of the negotiated SBL transaction between the lender and the borrower by entering the SBL details / instructions into the onshore lending agent's directed pooled lending system and liaising between its client and the onshore lending agent.