January 4th, 2022
(Rep. Joey Sarte Salceda is a Co-Author of RA 8799 or the Securities Regulation Code)
The technical difficulties in the Philippine Stock Exchange, which halted trading day for January 4, 2021, and which also affected local small investor subscriptions to initial public offerings, are deeply concerning.
Although the PSE is not a government agency, it nonetheless plays a key role in the country’s financial system. An explanation on the part of the PSE has not yet been given.
I am requesting the Securities and Exchange Commission to require the PSE to show cause. I am also requesting the Financial Stability Coordination Council (FSCC) to request the PSE to list actions taken to prevent similar incidents in the future, and to mitigate the risks of such incidents to the overall soundness of the country’s financial system.
Had the incident happened in the United States or any major bourse, it would have caused a hit on the confidence of investors on those markets. If the difficulties have a malicious source or background, this is, at the very least in consequence, economic sabotage.
I also encourage small investors to express to the SEC whether they have been adversely affected in any way by the trading halt. The fact that such incidents can and do happen demands a legal framework embodied in the Financial Consumer Protection Act which I principally authored, which the House approved, and which is pending in the Senate.
In the long-run, the rules governing the PSE as a self-regulating organization requires review by the FSCC and the SEC. The PSE is registered as an SRO under the Securities Regulation Code, which I principally authored in 2000, during my freshman year in Congress.
The SEC has powers to make rules and censure members of the SRO, under that law, precisely because we wanted to ensure that prudent restraints and guarantees exist to protect the general public from excesses or errors of such SROs. We have to ensure that the rules governing the PSE have the mechanisms necessary to hold accountable responsible parties for these errors, prevent these errors from affecting the broader financial sector, and provide guidelines for recompense of damages sustained by the general public.
We will closely follow this issue and seek explanations and accountability on the part of the PSE, the SEC, and the relevant service providers to the PSE. (end)