New bidding for stock trading right once held by Sapphire Securities set for July

MANILA, Philippines—The Philippine Stock Exchange will attempt anew to bid out the trading right held formerly by Sapphire Securities Philippines Inc., a local brokerage house once owned by sovereign wealth fund manager Brunei Investment Agency.

In a circular dated March 26, the PSE said it would bid out the trading right of Sapphire for a minimum price of P10 million on July 5.  This will be the second time for the PSE to auction off this trading right after the first bidding failed last year.

Interested bidders for this new round are given until May 16 to register and submit certain requirements. For those who will pass pre-qualification requirements, the deadline for submission of bid forms and bid envelopes will be on June 5.

This trading right was the subject of a court case — “Kevin G. Khoe vs. Sapphire Securities Phils. Inc. et al.” — that was resolved by the Supreme Court in a 2010 decision that stripped Brunei Investment of the trading right and transferred it to Nezpercez Trading Corp. The  end-result was that Brunei’s sovereign wealth fund manager involuntarily lost the trading right to Khoe, a fund manager who had some dealings with Sapphire in the 1990s.

The PSE, a self-regulatory organization, is conducting the bidding to be able to scrutinize prospective buyers. This is in line with the PSE’s amended by-laws and rules governing trading rights and trading participants. But proceeds from the sale will go to claimant Khoe.

The winning buyer is required not just to pay for the trading right but also to put up P100 million in minimum capitalization as a new trading participant.  As such, the bidding is expected to attract mostly institutional investors.

Industry sources said the last round of auction for Sapphire’s trading right failed because some interested bidders did not pass the pre-qualification requirements of the PSE, which has tightened those requirements in the last few years to ensure that only reputable people or institutions can enter the stock brokerage industry