PSE president Ramon Monzon and PSE chief operating officer Roel Refran
The Philippine Stock Exchange grew its net profit last year by 18 percent to P825 million on higher revenues from trading activity, subscription fees and market data alongside one-time gain on sale of its office space in Tektite Building in Ortigas.
Operating revenues and other income in 2017 increased by 10 percent to P1.63 billion. Revenues were supported by higher trading activity, stronger market data income and the gain on Tektite office space, which made up for the slack in listing revenues.
“The Exchange’s successful execution of its major initiatives in 2017 resulted in this positive financial performance of the company. The new products and services that were introduced provided more mechanisms for capital raising and supported our thrust of expanding the retail investor base,” PSE president and chief executive officer Ramon Monzon said in a press statement on Monday.
The year 2017 was a breakout year for local stocks thanks to a much-awaited tax reform program seen to fund the government’s promise of a “golden age of infrastructure” alongside a generally favorable global environment that buoyed fund flows to emerging markets. The Philippine Stock Exchange index (PSEi) gained a total of 25.1 percent for the year and ended on a record high of 8,558.42 on the final trading session as investors bet on another bullish year ahead.
For 2017, average daily turnover increased by more than 3 percent to P8.06 billion.
Subscription fees and market data income, on the other hand, increased by 26 percent as more investors used the online trading service of the PSE alongside the introduction of new data products.
Operating income went down by 3 percent due to lower listing-related income from initial public offerings (IPOs).
On the expenditure side, the PSE management reduced total expenses by 2 percent to P596 million last year.
In 2017, there were three issuances that used the new dollar denominated facility of the PSE, raising a cumulative $370 million while new rules for the listing of public-private partnership (PPP) projects were also launched.
In December, the guidelines for short-selling were submitted to the Securities and Exchange Commission (SEC) for approval. Short-selling allows investors to sell stocks they did not own yet by borrowing the underlying securities, allowing them to hedge their market positions as they deem fit.
The PSE is also seen on track with its scheduled stock rights offering which is being undertaken to reduce the brokers’ ownership in the PSE to the 20 percent limit mandated by the Securities Regulation Code. The SEC has approved both PSE’s registration statement filing and listing application for this offering which has been scheduled for February 26 to March 2 this year.
“We have set even bigger targets and milestones for the Exchange in 2018. With our stock rights offering proceeding within schedule, we hope to finally get the exemptive relief from the SEC for our acquisition of PDS (Philippine Dealing Systems Holdings Corp.). The consolidation of the equities and fixed income markets will result in a bigger and more efficient capital markets for the country,” Monzon added.
While the PSE hopes to seal its acquisition of PDS – the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp., Philippine Depositary and Trust Corp. and Philippine Securities Settlement Corp. – state-owned Land Bank of the Philippines has announced a rival bid for PDS.
“We continue to pursue other initiatives for this year including the introduction of the name-on-central depository program, launch of the short selling facility, creation of new indices and the launch of structured warrants and derivative products. Discussions with the SEC are on-going on many of these programs to ensure that we are able to provide the most suitable model for the Philippine market,” Monzon said.
Name-on-central-depository or NOCD will allow investors the ability to monitor their shareholding positions that are lodged at the depository as they will receive directly from the depository monthly reports on their stock position and transactions every month.
“We expect an increase in some expenses this year related to the integration of PDS into PSE as well as the one-time expenses related to PSE’s move to its new offices in BGC. We are continuously studying how to restructure and rationalize the operations of PDS to enable us to realize the operating and cost synergies that can be had in this acquisition. We’re always looking for ways to improve our operating efficiencies and reduce our operating expenses,” Monzon added.