There seems to be no end to the woes of the Philippine Dealing System (PDS) Group, the firm running the country’s bond exchange as well as the foreign exchange market and its associated services.
A few weeks ago, the PDS Group admitted to committing pricing errors on some of its fixed income benchmarks, prompting complaints from its banking clients as well as a probe by regulators on how an expensive computer system could be laid low by something as minor as the failure to manually update a couple of key interest rate inputs.
Now comes another one, just a few days after the PDS Group excitedly announced to its clients the upcoming launch of an ìupgradedî fixed income depository system. The much-awaited systems upgrade was introduced on Aug. 26 just before the financial markets entered a long weekend break.
But when markets opened on Tuesday, Aug. 30ólo and behold!ósome banks saw their accounts lighter after being debited several millions of pesos worth of transactions they never made. Worse, some banks saw their accounts fatter on the account of credits for transactions they never made. That became a problem for some banks whose treasury departments unwittingly lent out these excess millions in good faith, not knowing that these weren’t supposed to be in their books in the first place.
With complaints and questions coming in, the PDS Group’s tech guys called an emergency meeting with their outsourced technology provider, Tata Consulting. According to the PDS Group, Tata Consulting proposed an interim solution, but then informed them later that the interim solution could not be implemented as the problem deepened.
And how big was the problem? All told, 17 financial institutions were found to have anomalies in their accountsóa total of 29 transactions, in allóworth millions upon millions of pesos.
In it’s report to regulators, PDS pointed the finger at Tata Consulting for the botched systems upgrade, though we wouldn’t be surprised if the tech firm will put the some blame back to the firm.
In any case, the banks which pay steep fees for the ìcutting edgeî and ìstate of the artî financial market technology that the PDS Group is providing them are all asking: ìIs this what we’re paying them for?î
One particular concern for the banks is the difficult process of ìunwindingî all these transactions worth millions of pesos that were executed before the errors came to light.
Last Biz Buzz heard, a sufficiently worried Bangko Sentral ng Pilipinas and an embarrassed Bankers Association of the Philippines (the majority owner of the PDS Group) have launched separate investigations into the matter. Daxim L. Lucas
Not Okada
SHARES of holding firm Medco Holdings have sizzled in the stock market in the last few days on speculation that this could be the backdoor-listing vehicle to be used by Tiger Resort Leisure and Entertainment Inc., the local unit of Japanese tycoon Kazuo Okada that is developing the $2.4 billion Okada Manilaóthe newest integrated resort to rise in Pagcor Cityóbefore yearend.
Since closing at 69 centavos on Aug. 30, Medco’s share price has now surged by 81 percent to end Tuesday at P1.25 a share, close to the 52-week high of P1.30. And trading volume has been higher than the usual, with this company landing on the roster of most actively traded stocks. Tuesday, Medco was up by another 22.55 percent, giving it a market capitalization of P714 million.
But for stock pundits expecting this to be the future holding firm for Okada Manila, a source privy to the Tiger Resort group said that the rumors were not true. While backdoor-listing has been cited as an option for the Okada group, our source said there was no deal on the table with Medco. If there are other groups looking at Medco as potential a backdoor-listing vehicle, that story hasn’t spilled into the grapevine yet.
At present, Medco’s investment portfolio is composed of holdings in companies involved in financial services (commercial and investment banking) and trade development (operation of exhibition halls and conference facilities). MED’s subsidiaries and affiliates are Medco Asia Investment Corp., Export and Industry Bank Inc. and Manila Exposition Complex Inc. Doris Dumlao-Abadilla
Moving out
THE COLUMBIA Tower along Ortigas Avenue in Mandaluyong City may soon get some vacancies after a longtime occupant said it would move out. We’re talking about the Department of Transportation, now headed by Arthur Tugade, who made known his plan to move the DOTr to the Clark Freeport Zone in Pampanga.
Yes, Columbia Tower occupies a prime location, not to mention a stunning view of the lush greenery in the Wack Wack Golf and Country Club. We can imagine many a transportation secretary gaze at the scenery as a short respite from their seemingly endless problems. Nowadays, the tower suffers from nightmarish traffic along Ortigas Avenue.
Tugade, who used to head Clark Development Corp., said moving their office was part of Duterte’s call to decongest Metro Manila. So far, it was just the DOTr that was moving, and not its other crucial attached agencies in the city.
It would also happen fairly soon. Tugade, who has a reputation for demanding rapid action, said he wanted the transfer done by the first quarter of 2017 ìat the earliestî and the second quarter at the latest.
One more reason to move, surprisingly, had to do with cutting unnecessary expense.
Apparently, apart from the two floors the DOTr leases, it has been paying rent for a number of other offices it should not be shouldering. Tugade admitted that he did not understand this arrangement so it seemed prudent to simply end it. Miguel R. Camus
Getting some love, finally
SAY WHAT you will about the unconventional ways of the Duterte administration, but at least one conglomerate is happy about how things are moving along.
Six years after putting its proposal on the table, Metro Pacific Investment Corp.’s version of the connector road projectóan elevated tollway that will connect Makati City to the North Luzon Expresswayólooks finally set to get out of the starting gate.
Biz Buzz learned that MPIC (the local infrastructure arm of Hong Kong-based First Pacific Co.) expects to receive the final go-ahead ìanytime this weekî from the Department of Public Works and Highways.
ìAs soon as the Secretary [Mark Villar] gives his approval, the company is ready to break ground on the project,î an MPIC official told Biz Buzz, adding that the officials of the Duterte administration seemed to be moving with a greater sense of urgency compared to the previous dispensation.
ìMaybe it’s because they’re closer to the ground, so they can see things clearly and make faster decisions Ö unlike the previous guys who would send the issue all the way to the top, who would then come up with a [unprintable] decision,î the official added, clearly still smarting about the MVP group having been left out in the cold in the previous six years.
The good news is that, if MPIC finally gets the green light for the P15-billion project, the company brass believes they can complete a two-by-two lane tollway (slightly smaller than San Miguel Corp.’s three-by-three Skyway Stage 3 project) in as short as three years, compared to the original 5-year construction timeline.
If that happens, both elevated toll roads of MPIC and San Miguel may come online at the same time, finally offering relief to traffic weary Metro Manila commuters. For a fee, of course. Daxim l. Lucas
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