The Philippine Stock Exchange Inc. will begin volume weighted average price (VWAP) trading on March 1.
This comes after the Securities and Exchange Commission approved the PSE’s VWAP trading rules, the briefing of trade participants and onboarding of traders and brokers interested in the facility.
“The ability to easily place VWAP-based orders expands the options available to investors, especially those who prefer to use this approach in trading,” PSE president and CEO Ramon S. Monzon said.
”We expect foreign and institutional investors who prefer to look through price volatilities during trading and focus on the average price instead to avail of this facility,” he said.
VWAP trading may only be done within a 15-minute window after the market’s run-off period, or from 3.00 to 3.15 pm, using bourse computed price.
VWAP trades may only be executed by authorized salesmen or traders of brokers.
PSE has evaluated the VWAP rules of other bourses and use them as basis for its own VWAP trading rules as part of its goal for greater transparency in the market.
Institutional investors do VWAP trading in executing large orders to avoid artificially inflating the price of a security.
The rules were approved by the SEC in November last year.
