Listed firms soon can trade, settle dollar-denominated securities

The Philippine Stock Exchange (PSE) has issued the rules creating a pioneering window for trading dollar-denominated securities (DDS) in line with its goal of diversifying product offering to investors.

The rules, which can be downloaded at the PSE website www.pse.com.ph, provide the framework for the listing, trading and clearing and settlement of securities in dollar denomination.

“With the newly-approved DDS rules duly signed by the Securities and Exchange Commission (SEC), our goal is to provide a new investment product that both our issuers and investors can leverage on to address their expanding requirements. We are grateful for the collective support of the SEC (Securities and Exchange Commission), the BSP (Bangko Sentral ng Pilipinas) and all the stakeholders in helping develop these rules, ” PSE president Hans Sicat said.

The DDS rules allow PSE-listed companies to issue a new set of securities—either common or preferred shares—which are quoted, traded, and settled in US dollars.  This will provide listed companies the venue to raise new capital in US dollars to meet their dollar needs.  It also gives investors with dollar holdings an investment vehicle that could provide viable returns.

Implementation

Among the companies long waiting for the DDS rules is food conglomerate Del Monte Pacific Ltd., which intends to issue up to $360 million in US-dollar denominated perpetual preferred shares in the Philippine capital market. The group expects to launch the offering early next year subject to regulatory approvals and market conditions. The initial tranche is at $250 million, with the balance to be issued within three years.

While the SEC has approved the DDS rules, its implementation will be rolled out once the necessary infrastructure for the listing, trading and clearing and settlement are put in place.  Related to this, the PSE has scheduled seminars and information awareness campaign for trading participants and other stakeholders this December.

“We shall be working on preparing the market and infrastructure over the next four to six weeks to ensure the smooth and successful introduction of DDS.  Being a new product, it is important for the PSE that all stakeholders are properly informed of the dynamics of DDS,” Sicat said.

Direct investment

The PSE has been striving to introduce new products and services in the past four years as an integral component of its strategy to expand the market, including providing rules for the listing for public-private partnership projects or PPPs.

“We understand that the government is reviewing the relevant rules for real estate investment trusts (REITS) and we hope this will result in the first REIT listing in the country. With all the efforts on the product development front coming to fruition, we look forward to an exciting 2017,” Sicat added.

REIT gives investors, not just the property developer, the option to invest directly in the finished products that are already earning money—such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants.  This was meant to attract investors as anchored on the the Philippine REIT law of 2009, which requires the distribution of 90 percent of income annually.