Short Selling to Push Through in 2021, Says PSE Chief
The Philippine Stock Exchange (PSE) is pushing through with its plans to introduce short selling to the local bourse. According to PSE president Ramon Monzon, short selling will begin as soon as the details are ironed out with the Securities and Exchange Commission and Bureau of Internal Revenue.
Short selling is one of the PSE’s goals for 2021. For 2021, the exchange is also aiming for at least three initial public offerings, four real estate investment trusts, and new sector and thematic indices.
Short selling came under extreme scrutiny after the GameStop incident on Wall Street earlier this year. The investors who inflated GameStop’s stock price did so in retaliation against the short sellers who were banking on the company to fail. Short selling refers to the practice of borrowing then selling a stock with plans to buy it back later at a cheaper price than its selling price. As such, short sellers bank on stock prices dropping.
Monzon assures that a GameStop incident won’t occur in the Philippines as the market doesn’t have “option trading,” which contributed to the extreme volatility of GameStop stock prices. PSE will also limit short selling to the benchmark index and cap it at 10 percent of outstanding shares.
The PSE chief assures that the rules they have set for short selling are “adequate, reasonable, and conservative.”
No word yet on when short selling will be rolled out, but the PSE aims for its launch this year.