The Philippine Stock Exchange Inc. (PSE) announced that it will formally launch its short selling program on Nov. 6 after it was setback from the original Oct. 23 launch date.
The PSE defines short selling as "any sale of a security that will be settled by the delivery of borrowed securities, which allows the investor to benefit from an expected future decline in price."
Through short selling, investors are able to "sell borrowed securities at a higher price and buy the same securities at a lower price in the future to return to its lender."
Fifty-three securities, all of which are constituents of the PSE index (PSEi), Midcap, Dividend Yield indices and other exchange traded funds, will initially be eligible for short selling when the program launches.
PSE President and CEO Ramon S. Monzon called the implementation of the program an "important milestone for the Philippine stock market," stating that "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."
"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," Monzon added.
The initial launch date of the program was moved from Oct. 23 to allow market participants ample time to "prepare and comply with securities borrowing and lending (SBL) and short selling requirements)," said the PSE.
The PSE's Guidelines for Short Selling Transactions, referring to the regulatory aspects of the SBL and short selling, was put in effect on Oct. 2 of this year.