Corporate News

By Krista Angela M. Montealegre, Senior Reporter

Trading glitch prompts PSE to review guidelines

Posted on September 05, 2015

THE PHILIPPINE Stock Exchange, Inc. (PSE) is set to evaluate its guidelines to improve its response to trading issues after a technical glitch disrupted trading last week for nearly five hours, the longest in the bourse’s history.

A trader (L) descends down a flight of stairs near an electronic board showing prices on the Philippine Stock Exchange in Manila on August 25, 2015. AFP
The unprecedented trading lull on August 25 fanned speculation that the bourse intervened to curtail the stock market’s drop after it plunged by 6.7% on August 24 -- its biggest one-day fall since June 13, 2013.

“While the event is technical in nature, the Exchange recognizes that such trading disruptions need to be addressed with a holistic perspective. As such, the PSE will also review its relevant policies and procedures to identify ways to enhance its issue resolution protocols,” the bourse said in a statement.

The PSE said it would continue to engage its various stakeholders while strengthening its technology systems and business continuity processes. The bourse is also seeking third-party inputs on the identification of the root cause analysis and the actions it will be undertaking.

In defending its move to halt trading, the PSE said it was “necessary and deemed in the best interest of the public to maintain a fair and orderly market.”

“It was not imposed to stem the market’s drop. There were also no indications that the technical problem was in any way related to cyber security issues,” the PSE said.

Citing results of a preliminary review, the bourse blamed the trading stoppage on a technical issue pertaining to the “transmission of market data to the PSE front-end trading terminals.” These meant that the terminals “were not receiving market information in a timely manner.”

“In both cases, the PSE observed the load capacity of the market data servers feeding to the front-end trading terminals at full utilization. The number of messages being inputted in the servers spiked on both days given the heightened activity in the market,” the bourse said.

On both trading days, the exchange said no issues were encountered in the transmission of market data to platforms that connected directly to the market data feed coming directly from the PSETrade XTS, a trading engine developed by the NASDAQ OMX Group which has been in place since June 22.

The Exchange said it continues its investigation to validate its findings.

“The PSE deeply regrets the events that made it necessary to halt trading in the market and fully recognizes the need to implement measures immediately to address the technical issues it encountered,” the bourse said.

“It is the goal of the Exchange to strive to provide full system availability and in instances when disruptions occur, it continues to commit to respond decisively to bring normal operations back to the market as soon as possible,” it added.