Bourse operator Philippine Stock Exchange Inc., or PSE, issues its approval yesterday for the immediate implementation of the Guidelines for Short Selling Transactions.

PSE said critical components of securities borrowing and lending, or SBL provisions were also approved.

Short selling can only function with an SBL program in place.

PSE announces effectivity of short selling guidelines, other relevant SBL developments.

Weak market buffer

PSE announced SEC's approval of offshore collateral for SBL in May 2023 while the Bureau of Internal Revenue accepted the filing and registration of the Global Master Securities Lending Agreement, or GMSLA, in September 2023.

Short selling happens when a trader borrows shares and sells them in the hope that the price will fall after, so they can buy them back cheaper.

The process can help traders profit from downturns in stocks and protect themselves from losses.

"We are grateful to the SEC and BIR for their approvals on important regulatory aspects of SBL and short selling. This development brings us a step closer to the full adoption and implementation of these much-awaited programs," PSE president and CEO Ramon Monzon said.

The PSE also updated the eligible securities in its short selling guidelines to include members of the PSE midcap and PSE dividend yield indices. Initially, only securities comprising the PSE index and exchange traded funds, or ETFs, were considered eligible securities for short selling.