THE Philippine Stock Exchange, Inc. (PSE) has amended the guidelines for short-selling transactions on Wednesday, clarifying that short- selling orders will not be allowed during the market’s pre-open and pre-close phase.
In a memorandum posted on its website yesterday, the PSE said it noticed a discrepancy between Section 2.e of the Short Selling Guidelines and Article IV, Section 5.2.c of the Trading Rules.
While the former states that short selling orders will not be accepted during pre-open, pre-close, and run-off/trading-at-last, the latter only rejects such transactions during pre-open and pre-close periods.
“For consistency and to avoid confusion to our stakeholders, Section 2.e. of the Short Selling Guidelines shall be amended, as follows: short selling orders shall not be accepted during the following trading phases: pre-open and pre-close,” according to the memo.
Short selling pertains to the sale of a security that is not owned by the seller, but will be settled by the delivery of borrowed securities. An investor can generate profits by selling borrowed securities at a time of lower prices, then buying them at a lower price in the future.
The PSE looks to allow short selling within the year. — Arra B. Francia
