SEC oks trading of dollar-denominated securities
The Securities and Exchange Commission has approved the rules that pave the way for the listing, trading and settlement of US dollar-denominated securities (DDS) at the Philippine Stock Exchange (PSE).
DDS are securities denominated in US Dollars which are listed and traded at PSE.
The introduction of DDS aims to provide issuers with dollar denominated requirements an opportunity to raise capital without incurring foreign exchange risks. The DDS can also reduce the currency risk exposure of foreign investors who trade PSE-listed securities. Moreover, DDS offers local investors an alternative investment option for their US Dollar currency holdings.
The eligible issuers of DDS are those existing listed companies in good standing with the PSE. They must not have any outstanding penalties or other liabilities to the PSE, not the subject of any order of suspension from trading or any involuntary delisting proceedings, and not the subject of any pending case, investigation or similar proceeding by the PSE for violation of any applicable laws, rules, regulations or orders. PSE may also take into account other material factors, events, circumstances and other related matters that negatively impact the issuer.
The issuer is required to engage at least two eligible brokers who are qualified to trade DDS.
The eligible brokers are those trading participants of PSE who complied with the following requirements:
– they have attended the DDS training session or seminar conducted by the PSE;
– they must be operationally ready to trade DDS and shall issue a sworn certification to the PSE attesting to its operational readiness;
– they maintain a US deposit account or foreign currency deposit unit and a separate USD settlement account for clearing of trades;
– they must open a separate US dollar cash collateral deposit account for DDS; and,
– they must submit an undertaking to obtain the consent of its clients to the disclosure of their names to the SEC if said information is requested by the SEC in the course of an investigation, examination, official inquiry or as part of the surveillance procedures or compliance with other pertinent laws.
The brokers will also include the DDS transactions in the market end-of-day reports to the PSE.
The procedures for securities deliveries are the same as with peso-denominated securities. However, settlement will be denominated in US Dollars. Thus, brokers intending to participate in the trading of DDS are required to have a US dollar deposit account with any universal or commercial bank, and a separate US dollar cash settlement account with the designated settlement bank.
