SEC eyeing less costly process for traders

The Securities and Exchange Commission plans to make it manageable for corporate Philippines to offer securities over a longer period of time under the shelf registration process, allowing issuers to catch the best timing possible in tapping the capital markets.

Justina Callangan, SEC acting director for the corporate governance and finance department, told reporters last week that the corporate watchdog was drafting an amendment to the implementing rules and regulations (IRR) of the Securities Regulation Code (SRC) to make the shelf registration process for all types of securities less costly for issuers.

While the SEC allows shelf registration, as likewise provided for in the SRC, it currently collects 100-percent fee on the basis of the amount registered. This upfront fee is widely seen as a disincentive for those who plan to register a large amount.

Speaking to reporters on the sidelines of the 8th Philippine forum organized by The Asset magazine and the Fund Managers Association of the Philippines last week, Callangan said the SEC was drawing up an amendment to the IRR to make the shelf registration fees more manageable by allowing payment of fees in tranches.

“Now we’ll allow payment in tranches,” Callangan said. “Let’s say you want to offer P50 billion. You can divide (payment) in five tranches, but there is a three-year time for the RS (registration statement), which means within three years, you have to sell all, otherwise you have to pay for the fees. There will be no limit on volume of shelf registration, she added.

Shelf registration allows an issuer to register and sell, under the same prospectus and other regulatory filing requirements, a certain volume of securities that the issuer does not intend to use up right away.

In the case of exchange traded funds (ETFs), for instance, shelf registration is a way of allowing ETF proponents to sell more shares over a period of time without going back to the SEC to apply for an increase in authorized capital. This flexibility through shelf registration is seen to be crucial especially since ETFs in the country are required to be structured as a corporation rather than as a trust unit as what is practiced in many markets abroad.

Callangan said the proposed changes in the guidelines in shelf registration would still have to be approved by the SEC en banc.

“We’ll make a presentation by the end of this month,” she said.  Doris C. Dumlao