PSE trading participants compliant with required liquid reserves amid market volatility

By Leslie D. Venzon

MANILA, Sept. 20 (PNA) — The trading participants (TPs) of the Philippine Stock Exchange (PSE) remain compliant with the minimum required liquid reserves, indicating their strong financial resiliency amid stock market volatility, said the Securities and Exchange Commission (SEC).

A review by SEC of the report of Capital Markets Integrity Corporation (CMIC) indicated that among the 132 TPs that filed their risk-based capital adequacy requirements (RBCA) reports as of end of 24 August 2015, a total of 98 TPs suffered decrease in their net liquid capital due to the drop of PSE prices on said date.

It resulted in 67 TPs experiencing deterioration in their RBCA ratio and 22 TPs paring down their unimpaired paid-up capital due to paper losses in their proprietary investments.

The market decline also weakened 88 TPs due to an expansion in their aggregate indebtedness relative to net liquid capital.

Despite these, none of the TPs breached any of these various RBCA thresholds as of August 24, 2015.

The RBCA requirements pertain to the minimum required liquid reserves that ensure broker dealers have enough capital to sustain operating losses while maintaining a safe and efficient market.

PSE trading participants are required to comply with several RBCA requirements, including minimum RBCA ratio of 110 percent; minimum net liquid capital (NLC) of PhP5 million or 5 percent of aggregate indebtedness, whichever is higher; and maximum aggregate indebtedness to NLC ratio of 2000 percent. (PNA)