Insider Spotlight
The exchange said it has crafted a general framework that will govern all market-making operations, replacing the current approach that is largely limited to Exchange Traded Funds (ETFs). Market making involves the continuous provision of liquidity through the simultaneous posting of buy and sell quotations in accordance with exchange and regulatory rules.
Why it matters
Thin trading activity has long been a challenge in the Philippine stock market, with many listed companies experiencing limited daily turnover. By broadening the scope of market-making activities, the PSE hopes to encourage more consistent trading, narrower bid-ask spreads, and improved price discovery.
“Having a main framework will make it easier and more efficient for us to craft product-specific market making rules when needed,” PSE president and CEO Ramon Monzon said.
Under the proposed amendments, the framework will now cover Global Philippine Depository Receipts and may eventually be extended to individual stocks and other exchange-traded products, creating a pathway for wider market-maker participation across the exchange.
The details
PSE said market makers play a critical role in maintaining continuous liquidity by ensuring the availability of buy and sell quotations throughout trading sessions.
“A market maker has an important role in ensuring continuous liquidity in the stock market. We updated the rules based on global industry standards,” Monzon said.
The proposed rules establish accreditation requirements for market makers. Applicants must be SEC-registered broker-dealers and trading participants of the exchange.
Trading participants must have an unimpaired paid-up capital of at least P100 million and have operated continuously as a trading participant during the three years immediately preceding the application.
If the operating-history requirement cannot be met, the applicant must employ at least two key personnel with a minimum of five years of securities trading experience in a local exchange or a stock exchange that is a member of the World Federation of Exchanges.
What’s next
Beyond accreditation standards, the proposed framework sets obligations covering maximum bid-ask spreads, minimum quote sizes, and required market presence during trading hours.
The amendments also introduce incentives for compliant market makers that were previously unavailable. These may include clearing fee concessions, price-quoting services, connectivity support, and other benefits subject to commercial agreements.
Stakeholders may submit comments on the proposed rules until June 23, 2026. The feedback will be considered before the final amendments are submitted to the Securities and Exchange Commission for approval. —Daxim L. Lucas| Ed: Corrie S. Narisma
