SEC eyes hike in minimum stock float to 25%

THE SECURITIES and Exchange Commission (SEC) plans to increase the minimum public ownership requirement for publicly listed companies on a staggered basis starting next year to eventually reach 25 percent, at par with the ratio adopted across the Southeast Asian region.

SEC Chair Teresita Herbosa said the corporate regulator’s market securities regulation unit has completed a study on public float and recommended an increase in the minimum ratio from the current 10 percent to 15 percent on the first year, rising to 20 percent the next year and eventually reaching 25 percent.

The original plan is to sanction the first 5-percentage increase in public float requirement this 2015.

“Unfortunately, we’re also aware of what’s happening in the stock market now, with the major corrections and all, so we will defer that in the meantime and maybe start in 2016,” Herbosa said.

“Hopefully, once markets improve, we can do that,” Herbosa said.

The SEC was keen on mandating a higher minimum public float requirement for the Philippine Stock Exchange, Herbosa said, because “we found out that it’s the prevailing MPO (minimum public ownership) in Asean (Association of Southeast Asian Nations).”

Meanwhile, the SEC welcomed the signing of the statement of understanding for the establishment of the Asia Region Fund Passport (ARFP) at the Apec Finance Ministers Meeting in Cebu. Finance Secretary Cesar Purisima and the finance ministers of Australia, New Zealand, Japan, South Korea and Thailand were the signatories to the ARFP initiative.

Once fully implemented, ARFP is seen to achieve the freer flow of capital within the region by providing a multilaterally agreed framework to facilitate the cross border marketing of managed funds—such as mutual funds—across participating economies in Asia. In the longer term, ARFP could also facilitate funds from the Asian region being marketed in Europe through an Asian/European mutual recognition agreement.

The ARFP, under the Finance Ministers Process of Apec, was initiated in response to the growing recognition of the value of creating better financial linkages among economies in the region and the desire to work toward a reduction of barriers and transaction costs due to varying taxations, laws and regulations.

“That’s a big plus for us. It shows our commitment to join in that initiative,” Herbosa said.

The SEC also welcomed the development by the Asean Bond Market Forum (ABMF) of a regional bond issuance framework to facilitate cross-border bond issuance within the Asean+3 (Asean plus South Korea, Japan and China) participating economies.

The 10 Asean member-countries are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

Named the Asean+3 multi-currency bond issuance framework (AMBIF), this scheme will allow companies to issue local currency bonds in multiple countries within the region. This is seen as a possible mechanism to address the diversity of regulations and market practices among the Asean+3.

ABMF groups fixed-income market stakeholders in the Asean such as regulators, trading and settlement operators as well as self-regulatory organizations such as stock exchanges.

Currently, a company wishing to issue cross-border bonds in the Asean+3 has to contend with a diversity in rules, regulations and practices and may incur substantial cost in simply trying to understand the regulations and processes of each country. The initiative by the ABMF aims to simplify the process by providing a set of guidelines to assist a company in looking for financing or investment in an unfamiliar market.