Fat-Finger Error Prompts Philippine Exchange to Review System

(Bloomberg) -- The Philippine Stock Exchange will review its trading system and procedures after a local broker this week placed a wrong sell order that caused a 38% rout in the shares of Cebu Air Inc.

The mistake happened Tuesday during the market’s no-cancel period two minutes before the end of trading, when the closing price is settled. The exchange will discuss with brokers possible safeguards that can be added when they post orders, PSE Chief Operating Officer Roel Refran said in a phone interview on Thursday.

The current system prompts traders to review the transaction and confirm it before processing but Tuesday’s error reminds traders that these can happen at any time. “How can we better improve that, and how can we better educate users about those functionalities?” Refran said.

AB Capital Securities Inc., Abacus Securities Corp., David Go Securities Corp. and Equitiworld Securities Inc. confirmed they canceled their buy orders when they learned about the fat-finger error, even though the exchange let the transaction go through since it found no technical glitch during the incident.

Quality Investment & Securities Corp., which executed the Cebu Air sell order that was meant for another company, said it will honor non-canceled trades and deliver shares in time for the clearing deadline on Friday. It declined to disclose the number of shares involved. Quality sold 95,000 Cebu Air shares on Tuesday, according to data compiled by the exchange.

--With assistance from Ian Sayson.

To contact the reporter on this story: Claire Jiao in Manila at cjiao5@bloomberg.net

To contact the editors responsible for this story: Cecilia Yap at cyap19@bloomberg.net, Teo Chian Wei, Divya Balji

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