Short selling eyed as market driver
We are pushing to align the short selling environment with the major Asian markets, which has the potential to promote liquidity
Daily TribuneWe are pushing to align the short selling environment with the major Asian markets, which has the potential to promote liquidity
The Securities and Exchange Commission, or SEC, seeks to create a regulatory environment that will pave the way for executing short selling to boost local trading activities.
Short selling is a practice of betting on the decline of a stock's price to make a profit.
It allows an investor to sell a security that he does not own, consummated by the delivery of a borrowed security, with a commitment to return the borrowed security or its equivalent on a determined or determinable future date.
In Asia, short selling is allowed in Singapore, Hong Kong, Malaysia, Thailand, and Indonesia, among others.
Thus, the SEC is targeting the adoption or non-adoption of existing practices in other markets to advance short selling in the country.
Likewise, the SEC is also considering requiring the submission of a regular report on all short selling and securities borrowing and lending activities and their compliance with current rules and policies, to better guide the Commission on policies on short selling moving forward.
"We are pushing to align the short selling environment with the major Asian markets, which has the potential to promote liquidity, stabilize the market, protect investors, and further unlock the value of shares of Philippine corporations," SEC chairperson Emilio Aquino said in a press statement on Monday.
Innovator, regulator in one
"We will balance our role as regulator and market innovator, imposing the necessary restrictions and safeguards while ensuring that they will not stifle investors and trading participants from fully taking advantage of this trading strategy," he added.
The SEC has paved the way for short selling in the country by issuing the relevant rules as early as 2018 when it approved the Philippine Stock Exchange Guidelines on Short Selling Transactions.
It has since worked together with the PSE and market participants to ensure that they are ready for the implementation of the guidelines.
The SEC has already approved guidelines that will facilitate the conduct of short selling in the local market.
