PSE selling P2.8-B shares in move to dilute brokers’ influence

The Philippine Stock Exchange (PSE) announced a major share sale Thursday seen to pave the way for its compliance with a long-running issue on broker ownership spanning almost two decades.

The board of the PSE announced a public offering of up to 11.5 million common shares, valued at around P2.8 billion, based on the company’s current market value. The shares would come from the unissued portion of its authorized capital stock.

The PSE said details of the offering would still have to be finalized.

It noted the objective was part of its “compliance plan to align the shareholder ownership with the limits set by the Securities and Regulation Code (SRC).” The law was signed in 2000.

Section 33 of the SRC outlined, among other items, that individuals can own no more than 5 percent of the PSE while for business groups, the cap is at 20 percent.

Ramon Monzon, the newly appointed CEO of the PSE, said it was their intention to comply with that ownership requirement under the SRC, noting they have been given another year to do so by the Securities and Exchange Commission (SEC).

He said brokers still owned about 27.9 percent of the PSE. This has already come down from 40 percent.

The PSE’s broker-owners and the SEC have been at odds over this issue ever since the rules were created. In the past, the SEC would impose fines on the PSE for noncompliance.

The SRC came in the wake of the BW Resources stock manipulation scandal in the late 1990s, a bruising episode that gravely damaged investors’ confidence on the PSE and prompted a string of reforms. Among those was the restriction on the influence of brokers on the PSE given the role some trading participants played during the BW issue.

In its filing Thursday, the PSE said it would use funds raised from the share sale to pay for the acquisition of PDS Holdings Corp., the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp., and also for its working capital requirements.