SEC asks PSE to explain trading halt

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The Securities and Exchange Commission has sought the Philippine Stock Exchange Inc.’s explanation why it has suffered another trading halt a week ago, the first this year after the latter claimed to have fixed its system.

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The agency’s markets and securities regulation department (MSRD), during the regulator’s en banc meeting, reported that it has already asked the PSE to explain in writing as to why it has no back up communication line that may be resorted to in case its main line is disconnected.

Further, the MSRD likewise told the PSE to furnish a certification issued by the latter’s service provider, Globe Telecom, which would confirm the occurrence of the disconnection on the date and time of the market halt.

Finally, the department also asked the local bourse to “submit a system diagram of the communication line identifying the connection which encountered problem.”

On April 8 at 10:28 am, the PSE decided to halt trading in the market, which lasted for only 41 minutes as the trading resume again at 11:10 a.m.

Hans Sicat, president and chief executive officer of the Exchange, told reporters that the halt was due to a third-party network issue, thus it was not the same as what happened last year.

“Clearly, we are evaluating what exactly happened. In layman’s term, the connection of various servers got cut. We always test [our system], in fact the decision to halt was ours, because we saw some instability in the system,” Sicat said.

When asked whether the trading halt was the same as the “technical glitch” that happened twice last year, which was one of the factors why the Securities and Exchange Commission denied the bourse’s application for exemptive relief to enable it to acquire PDS Holdings Inc., which owns bond bourse Philippine Dealing & Exchange System, the top executive said, “I think that’s a different thing. We already said that the SEC was wrong to say that it [technical glitch]was not resolved. It was resolved, we had a third-party provider that validated that the issues [last year]were fixed.”

SEC Chairperson Teresita Herbosa, on the other hand, said it would wait for the PSE’s explanation as to what really happened last April 8 saying, “It would be unfair for the PSE if we comment without really knowing what happened as to why they decided to halt the market on the aforesaid date and time.”

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