The Philippine Stock Exchange’s plan to shut down its unified trading floor, just after a few years in operation, signals the end of an era for the institution that has been steeped in its traditions.
In a memorandum to all trading participants, PSE President Ramon S. Monzon said “the Exchange, with the approval of its Board of Directors, has decided to shift to a floorless trading, given the technological advancements that have made a floorless trading set-up efficient and responsive to the needs of the investing public.”
“It is a tearjerker of a memo,” said veteran stockbroker Joseph Roxas, President of Eagle Securities, who has been working at the trading floor for 36 years (minus the times when the trading floor was closed due to the pandemic) — practically his entire professional career.
Roxas started at the Manila Stock Exchange as a young trader fresh out of college, and then at the Philippine Stock Exchange’s Tektite trading floor, and at the current trading floor in Bonifacio Global City when the PSE closed both its Ayala and Tektite offices.
Brokers actually started getting weaned fro the trading floor in 1994 when the solomonic solution to the warring Manila and Makati stock exchanges was to have two trading floors, Ayala and Tektite, which were electronically linked.
The electronic link between the two trading floors came in a system that also gave stock brokers remote access to the live trading activity at the floor so the bigger ones used this technology to set up their own trading rooms complete with electronic trading boards.
“The shift to digitalization and automation driven partly by the pandemic, have resulted in trading participants now conducting their trading activities off-site,” said Monzon.
He added that, “Under the circumstances and the continuous evolution of trading operations in global markets, the Exchange has decided to permanently close the trading floor and migrate to floorless trading.”
“Given the foregoing, the trading floor will be permanently closed upon completion of pull-out of TPs that currently maintain trading booths,” the PSE said.
The PSE will be among the first, if not the first and only, stock exchange to go floorless as the world’s oldest and most technologically advanced exchanges continue to maintain their respective trading floors as part of a centuries old tradition.
Other stockbrokers are more pragmatic. Regina Capital Development Corporation Managing Director Luis Limlingan said that, “As with many industries, the pandemic accelerated the transitioning of trading online and remotely as opposed to traditional booths.”
“It’s not seen to have a significant impact on trading activity,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He noted that “In the end, whether at the trading floor or virtual, market players are still expected to take their cues from the macroeconomic picture both local and global, as well as from corporate developments.”
The PSE reported that online investor accounts grew by 23.8 percent year-on-year to 1,159,034 from 936,200 in 2020. Online accounts comprised 71.5 percent of total stock market accounts in 2021.
The surge in online accounts also paved the way for the total number of accounts to post its highest year-on-year increase in terms of new accounts at 223,264.
The previous record was 220,603 accounts registered in 2018. For 2021, total stock market accounts rose by 16.0 percent to 1,620,017.
Consistent with the growth in online accounts is the pickup in number of online trades.
Online investor accounts were responsible for 74.7 percent of total trades in the stock market during the year. This translates to 21.45 million trades, which is 20.6 percent more than the 17.78 million transactions in 2020.
Consequently, the value of online trades also went up by 43.6 percent to P744.49 billion from P518.27 billion the previous year.
Despite the brisk activity in the online space, the non-online accounts still registered a much higher trading value at P2.92 trillion, up by 11.0 percent from 2020’s P2.63 trillion.