PSE-PDS merger not happening at this time

THE UNIFICATION of capital market infrastructure in the Philippines is not happening at this time.

The Securities and Exchange Commission (SEC) has rejected a request from the Philippine Stock Exchange for exemptive relief from the 20 percent limit on ownership by the local bourse of what is envisioned to be a unified exchange.

In a disclosure on Tuesday, the PSE said it had received on March 28 a letter from the SEC denying the request for such exemption – a pre-condition to the closing of a deal to raise the PSE’s interest in the Philippine Dealing System Holdings Corp. (PDS Group) to 100 percent.

PDS is the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depositary and Trust Corp. (PDTC) and Philippine Securities Settlement Corp.

“The company does not foresee this SEC decision to have any material adverse impact on the operations of the exchange,” PSE corporate information officer Aissa Encarnacion said. “The company remains committed to producing more products and services and promoting efficiencies in the market and thus will vigorously pursue plans and strategies to advance the commitment,” she added.

SEC chair Teresita Herbosa is set to hold a press briefing on this matter on Tuesday afternoon.

Consolidating the trading platforms in the country is seen in line with global best practices and market structure – one which is seen to create a transparent and efficient bourse with central clearing and settlement facilities across multiple asset classes. Looking across Southeast Asia as well as Hong Kong, Korea and Japan, there is only one exchange that operates both equities and fixed income securities trading in these neighboring markets.

The SEC, however, earlier raised a string of concerns on the proposed acquisition, including issues on monopoly, hefty depository fees and governance structures.