The Securities and Exchange Commission (SEC) s has approved the Philippine Stock Exchange’s (PSE) plan to increase its stake in securities depository and fixed-income trading platform operator Philippine Dealing System Holdings Corp. (PDS Group), subject to further review and approval.
The PDS Group operates the Philippine Dealing & Exchange Corp. (PDEx), which in turn operates the platform for trading of fixed-income securities issued by firms and the government. It also calculates the Philippine Dealing System Treasury Reference Rates, which form the basis for valuing and marking-to-market interest rate-sensitive instruments.
The SEC said this after its commission en banc allowed the PSE to apply for an exemptive relief from the mandatory limit on ownership and voting rights in an exchange by an individual or an industry – 5 percent for a person and 20 percent for an industry or business group – as outlined in the Securities Regulation Code that will be triggered once negotiations for the buyout of the PDS Group is finalized.
PSE owns 20.98 percent PDS Group and has been working to unify the country’s two trading platforms – equity and fixed income under one ownership since 2012.
In 2016, the PSE signed a share purchase agreement with the Bankers Association of the Philippines to acquire the latter’s 23.8 percent in PDS for P476.45 million or at P320 per share, apart from inking a similar agreements with the other shareholders of the PSE.
The SEC said as part of its conditional approval, it is requiring the PSE to submit a “detailed, concrete and time-bound operational plan, which shall be subject to review and approval by the commission, as well as status reports on the negotiations that PSE will pursue in relation to the acquisition of the remaining shares in the PDS Group that it does not yet own.”
“Based on the initial submissions made by PSE, the proposed acquisition will operate in the public interest, as the resulting integration of the country’s equity and fixed-income exchanges would allow for the delivery of more efficient and more types of products, services and better risk management systems for financial services,” the SEC said.
“The SEC directed PSE to submit and present a detailed, concrete and time-bound operational plan, which shall be subject to a separate review and approval by the commission to ensure that the proposed integration of PSE and the PDS Group will lead to greater access to both fixed-income and equity products for retail investors, reduced cost of trading securities, and similar efficiencies and benefits for issuers and other market participants,” it added.
