The Philippine Stock Exchange is planning to revise its trading rules so it can formally adopt exemptions to the application of a trading band following controversies hounding it after it decided not to put a price cap on the recent trading of Liberty Telecommunications Holdings Inc.

The trading band is a safeguard against intraday volatility and possible insider trading by capping the gain in the price of a stock at 50 percent from the previous day’s close and setting a floor of 40 percent before the previous trading day’s closing price.

In a memorandum, the PSE said its board of directors, during its meeting last August 12, 2009, approved the incorporation in the Exchange rules of the rule on the lifting of trading band.

The PSE proposed that the trading band under existing rules of the Exchange shall be lifted when trading
resumes for securities that have been suspended for a period of one year or more.

The trading band may also be lifted when the PSE determines that there has been an event or occurrence that may cause the price of the security to change drastically; or when the application of the trading band on the price may render impractical the trading of the security upon prior notice by the PSE “as may be warranted under the circumstances.”

Because of these changes, the PSE is inviting all concerned parties to give their comments on the proposed additional rules on lifting of trading band.