The Philippine Stock Exchange, Inc. (PSE) has crafted a general framework that will be applicable to all market-making operations in a bid to boost stock market liquidity.
Market making is the continuous provision of liquidity by a Market Maker through the simultaneous posting of two-way quotes, executed in compliance with the Exchange rules and applicable regulatory requirements.
“Having a main framework will make it easier and more efficient for us to craft product-specific market making rules when needed,” said PSE President and CEO Ramon S. Monzon.
PSE’s existing market making rules are for Exchange Traded Funds. The amendments now include a market making framework for Global Philippine Depository Receipts and may be expanded later on to cover individual stocks and other exchange-traded products.
“A Market Maker has an important role in ensuring continuous liquidity in the stock market. We updated the rules based on global industry standards,” Mr. Monzon added.
The proposed rules include the accreditation for Market Makers. They should be registered broker-dealers with the Securities and Exchange Commission (SEC) and a trading participant (TP) of the PSE. The TP should have an unimpaired paid up capital of least Php100 million and has been continuously operating as a TP for the three (3)-year period immediately preceding the filing of the application. If the TP is unable to meet this requirement, it should have at least two (2) key personnel who have at least five (5) years’ experience in securities trading in a local or WFE-member stock exchange.
The rules also discuss the obligations of a Market Maker such as maximum bid-ask spreads, minimum quote sizes, and required presence times during trading sessions.
The amended rules also introduce incentives for compliant Market Makers that were not previously available. The incentives are subject to commercial agreements and may come in the form of Exchange and clearing fee concessions, price quoting services, connectivity support, among others.
The proposed rules may be downloaded through the PSE website, www.pse.com.ph. Stakeholders have until June 23, 2026 to submit their comments. The comments received by the Exchange will be considered in the final version of the rule amendments that will be submitted to the SEC for approval.
