Background

On October 2, 2023, the Philippine Stock Exchange ("PSE") issuedPSE Memorandum CN-2023-0048, which declared the PSE Short Selling Guidelines effective. On October 11, 2023, the PSE also issuedPSE Memorandum CN No. 2023-0053, setting out the Regulatory Requirements for Securities Borrowing and Lending. Further toPSE Memorandum CN-2023-0056, the PSE officially launched its Short Selling Program on November 6, 2023.

While the PSE Short Selling Guidelines (annexed to PSE Memorandum CN-2023-0048 linked to above) were first published by the PSE in June 2018 (and revised in January 2019), the following regulatory milestones, occurring only this year, allowed the PSE to implement and launch its Short Selling Program:

1. In a letter dated September 6, 2023, the Bureau of Internal Revenue ("BIR") confirmed that it may accept the filing and registration of a Global Master Securities Lending Agreement ("GMSLA") if at least one party to a Securities Borrowing and Lending ("SBL") transaction is a foreign national, provided that the GMSLA complies with relevant BIR and Securities and Exchange Commission ("SEC") regulations. Registration of the GMSLA is required for eligibility of an SBL transaction to a conditional tax-free status.

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