PSE may implement broker anonymity this year

Posted at 02/27/2014 4:52 PM

MANILA, Philippines - The Philippine Stock Exchange (PSE) is looking into the possibility of implementing broker anonymity this year.

Broker anonymity refers to the practice of not showing the broker identifiers for trading matched at the trading engine. The PSE had earlier targeted the implementation of broker anonymity by March 2015.

"Since we announced our plan to move to a broker anonymous environment, we have been receiving positive feedback from market participants who see the move as a way to attract more investors to trade in our market. Implementing this program this year instead of next year will allow us to experience the upside from this change much earlier,” PSE President and CEO Hans B. Sicat said in a statement.

The PSE said it will no longer implement Phase 1 of broker anonymity in March 2014 which involves limiting the visibility of brokers IDs of matched trades only to brokers and their systems. By removing Phase 1, broker anonymity, once implemented, will make all broker identifiers anonymous to all market participants.

"Even as we are now planning to have broker anonymity implemented this year, we have to evaluate the readiness of the market and various systems for full broker anonymity under the reduced time frame to prepare for this change. We hope to finalize our study over the next weeks and make announcements on the final schedule shortly after that," Sicat said.

The PSE chief assured that surveillance operations will not be affected by this move, since regulators will continue to have access to information on broker IDs.

"The market oversight functions of the Capital Markets Integrity Corporation and the Securities Exchange Commission will not be impeded in any way under a full broker anonymity regime," he said.

Implementing broker anonymity will align the PSE with with similar practices in most markets abroad. Among the Asian markets that have adopted broker anonymity in the last 15 years are Japan, Korea, Malaysia, Singapore and Thailand.

Markets overseas have adopted broker anonymity to attract more participants, as well as improve liquidity. The practice is aimed at preventing the "herd" mentality as the identity of brokers who post and match orders is withheld which usually translates into tighter spreads.