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In the current trading in the stock market in the Philippines, stock prices are only allowed to go up by 50% and fall by up to 40% in session before the trading is halted. In its review of trading rules, the Philippine Stock Exchange (PSE) has granted exemptions to the limits in these daily fluctuations in stock prices.

The PSE issued a memorandum dated August 26, 2009 which said that its board had agreed to lift the trading band for stocks resuming trading after being suspend for at least a year or those under “exceptional circumstances” as determined by the local bourse, such as if there is an event or occurrence that is likely to cause the prices on stock market to change drastically.

The said amendment on trading rules was done by the PSE to protect investors from excessive volatility, particularly when prices of stocks fall dramatically for no apparent reason. It has already informed member-brokers of its plan to raise the daily limit on the decline of stock prices to 50 percent from 40 percent.

Joseph Roxas, Eagle Equities Inc. president, said in an interview that he welcomed this amendment and favored the exemption to the volatility band of stocks that had been suspended for at least a year. “It’s just right. For some issues like Liberty (Telecom Holdings Inc.) , for instance, something big has happened in between that should be factored in by the market,” said Roxas.

Trading of Liberty share has just resumed recently and it was allowed the exemption to the trading band following its disclosure about the entry of a group of investors led by San Miguel Corp.

But Roxas was quick to add that he did not favor the additional exemptions, noting that the proposed 50-50 percent trading limit was already sufficient. “We already have one of the highest, if not the highest in the region,” he said.

The PSE is inviting all concerned parties to submit their comment on the said memorandum on or before September 15.