Insider Trading Concerns Cast Shadows Over Philippine Stock Exchange

In a recent Manila Rotary Club meeting featuring Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. as a guest, the governor outlined a comprehensive plan to invigorate the capital market, including measures to enable companies with lower ratings to issue corporate bonds and the introduction of index funds.

Insider trading rumors have been circulating within the PSE, raising questions about the integrity of the local market and potentially contributing to its underperformance compared to its ASEAN peers.

Governor Remolona also addressed the challenges faced by the Philippine capital market, labeling it a "laggard" in various aspects, including the number of Initial Public Offerings (IPOs).

However, a significant issue highlighted in the governor's speech was Insider Trading within the Philippine Stock Exchange (PSE).

Remolona expressed concern about individuals with privileged information gaining an unfair advantage in the market, a practice he deemed unacceptable based on his experiences with the Bank of International Settlements and the Federal Reserve Bank of New York.

Insider trading rumors have been circulating within the PSE, raising questions about the integrity of the local market and potentially contributing to its underperformance compared to its ASEAN peers.

This concern has also been echoed by prominent foreign funds that have chosen to bypass the Philippines. The local market's value turnover averages just P5 billion or about $100 million as against that of Thailand with 99 billion baht or $3.3 billion and Vietnam with 30.8 trillion VND or $1.34 billion.

And yet the Philippines set up the first stock exchange in 1927.

Governor Remolona emphasized instances where trades occurred before the release of significant news, indicating a potential prevalence of insider trading. This revelation serves as a wake-up call for the PSE and the Securities and Exchange Commission (SEC) to address the issue promptly.

Investors have pointed to specific instances where the PSE allegedly failed to fulfill its mandate to enhance the capital market.

The case of Abra Mining, a speculative mining stock that experienced a dramatic rise and fall, exemplifies such concerns.

After PSE officials suspended the stock due to the sale of unregistered shares, PSE President Ramon Monzon introduced the concept of a "white knight" to salvage the company, leaving investors perplexed and questioning the decision's legitimacy.

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