More than 25 years after the merger of the Manila Stock Exchange (MSE) and the Makati Stock Exchange (MKSE) into the Philippine Stock Exchange (PSE), the country’s securities industry is set to be finally unified in a single trading floor.
The PSE Tower at One Bonifacio High Street in Taguig City will start operations on Feb. 19, almost a decade after it was first announced that the unified trading floor would be built in Bonifacio Global City (BGC). It is strategically located along BGC’s 5th Avenue, touted to be the next “Wall Street of the Philippines.”
Founded in 1927, MSE was the second oldest stock exchange in Asia with its trading floor based in Manila’s Binondo district adjacent to Escolta, the country’s original version of Wall Street. Binondo was the world’s first Chinatown and the largest in terms of population today.
In 1963, a breakaway group of stockbrokers formed the MKSE in the town of Makati, which was being developed as a commercial and residential suburb. Its trading floor was located along Ayala Avenue, which was emerging as the new Filipino Wall Street.
Both trading floors operated on the so-called open outcry system using blackboards and chalk, similar to the prevailing style at the New York Stock Exchange in Manhattan’s Wall Street. The MSE and the MKSE traded the same set of corporate equities but not necessarily at the same prices.
This unusual arrangement allowed arbitrage for clients who traded with brokers in both stock exchanges. It often led to wide pricing deviations for the same common stock, a situation not found in other countries with multiple bourses.
To ensure a level playing field, then President Fidel V. Ramos ordered the MSE and the MKSE to merge in December 1992. The following year, brokers of the defunct MSE moved from Binondo to the PSE Center at Tektite Towers in the Ortigas central business district of Pasig City. Meanwhile, former MKSE brokers transferred to a new trading floor at the PSE Plaza on Ayala Triangle in the new City of Makati, now firmly established as the financial capital of the Philippines.
Initially the two floors used different electronic trading systems with the same prices for traded shares after abandoning the open outcry system. It took years before a unified trading system was put in place. During its first 15 years, the PSE’s head office was based in Ortigas but later moved to Ayala in preparation for the unification of the trading floors.
Even the site of the new headquarters at BGC took long to be decided upon, following several changes in location, building plans, and timeline. Finally the corner of 5th Avenue and 28th Street was selected, with a 26-storey building under construction at the premier block of Ayala Land Premier’s flagship development. Last Nov. 30, the PSE’s giant digital ticker wrapped around the new tower was unveiled, signaling that the finishing touches were almost done.
On Feb. 12, the Ortigas trading floor held its closing ceremony, followed by the Ayala trading floor on Feb. 15.
This weekend is moving-in time for the PSE’s staff and trading participants with booths in the BGC trading floor, in time for Chinese New Year and the inaugural ceremonies next week. Will BGC eventually become the country’s financial capital?
Kung Hei Fat Choi!
The author is the CFO of the Asian Center for Legal Excellence and serves as Chairman of the FINEX Media Affairs Committee’s Golden Jubilee Book Project.