PSE to get new market surveillance system

Business World

THE PHILIPPINE Stock Exchange (PSE) will acquire a new surveillance system early next year to monitor stock trading activities.

"The PSE, acting on behalf of the successor company of its Market Regulation Division (MRD), is acquiring a new surveillance system, which will enhance its capability to monitor stock trading activities and strengthen market integrity," the local bourse said in a disclosure on Thursday.

The MRD is being spun off into an independent corporation. The new company’s papers are still pending before the Securities and Exchange Commission.

PSE Chairman Hans B. Sicat said the fully automated new surveillance system, EXTURE, was developed by the Korea Exchange. The purchase agreement will be completed in the first quarter of 2011. EXTURE is expected to be operational by the first quarter of 2012.

"Integrated into the EXTURE surveillance system are detection rules, statistic analysis models, benchmarks and accounts relation and pattern recognition logics," the PSE said. "The accuracy of these analysis models is crucial for maintaining a fair and orderly market," it added.

On July 26, the PSE launched the New Trading System (NTS) that replaced the Maktrade system, which dates back to the unification of the trading operations of the Manila and Makati stock exchanges 15 years ago. The NTS allowed a higher number of orders and transactions, prompting the need for a better monitoring system.

The new surveillance system will also have an Integrated Visual Analysis System tool that can illustrate the market at a glance. The function will reduce average analysis and investigation time, increasing the efficiency of the whole market surveillance operations.

"The PSE has taken a major leap in improving governance in the Exchange by separating the regulatory and business functions through the incorporation of an independent and separate corporation that will supervise and monitor activities of trading participants. The investment in intelligent, state-of-the-art technology will help provide additional safeguards for stock market investors," Mr. Sicat said.

Illegal acts in the stock market include insider trading, wherein an undisclosed vital information in a company is used to gain a trading advantage; hype and dump, wherein traders buy at increasingly higher prices and then sell shares at the higher prices; and painting the tape, wherein traders buy or sell shares to show that there is price movement in a stock.

The PSE is the country’s only stock exchange with 253 listed firms and 133 active trading participants. -- N. J. C. Morales