The Philippine Stock Exchange (PSE) said Friday it will launch the short selling program in November, two weeks behind the original schedule, to allow more traders to adequate comply with the requirement.
It said in a statement the short selling program would officially go live on Nov. 6, instead of the original schedule of Oct. 23.
This will give market participants more time to prepare and comply with securities borrowing and lending (SBL) and short selling requirements, it said.
“The implementation of short selling is an important milestone for the Philippine stock market. The ability to take short positions will provide investors a tool to hedge their investments, which hopefully will help attract foreign investors back to our market,” PSE president and chief executive Ramon Monzon said.
“Short selling is also an essential component to our securities borrowing and lending program and should generate increased trading activity as more shares are made available through lending,” he said.
Short selling is the practice that allows investors to bet on the price of a falling stock. It involves borrowing shares and selling them at one price, in the hopes of buying the same number of shares at a lower price later to return them to the lender.
This program is expected to boost trading activity and liquidity in the stock market as this will attract foreign investors. About 53 securities will initially be eligible for short selling.
These securities include the 30 blue-chip companies that make up the PSE index and constituents of the MidCap, Dividend Yield indices and the exchange traded fund.
The list of eligible securities will be updated when there are changes in the composition of the said indices.
The local bourse announced early this month the effectivity of PSE guidelines for short selling transactions after the regulators approved the critical components of the program.