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Short selling would attract hedge fund money, says Philippine Stock Exchange boss

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Philippine Stock Exchange (PSE) chief executive Ramon Monzon believes allowing short selling could help attract foreign money from global hedge funds, but is facing opposition to his plans from local regulators, according to a report by The Financial Times.

The wild price swings that were seen during the GameStop frenzy when an army of online traders decided to take on the hedge funds that had shorted the US video game retailer, are reportedly cause for concern for the Philippines Securities and Exchange Commission.

Monzon though is determined to convince them that foreign funds would boost liquidity in the PSE and modernise an exchange whose products are lagging behind those on offer at other south-east Asia trading venues.

Monzon believes that the PSE is “way behind” without short selling, and that without hedging options, foreign investors are more likely to manage risk by withdrawing from the market completely.

In late 2019, the Philippines SEC approved guidelines governing both the borrowing and lending of securities and short selling, but they have yet to be implemented. The regional stock exchanges in Singapore, Indonesia, Thailand and Malaysia meanwhile, already allow short selling.

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