The Philippine Stock Exchange (PSE) has weeded out dormant stockbrokers from its ranks as part of efforts to comply with the 20-percent cap on bourse ownership by a single industry.
This developed as the Securities and Exchange Commission (SEC) called out the PSE for what the regulator described as an “inaccurate” and “misleading” statement on the reduction in brokers’ ownership.
Trading on shares of PSE was ordered halted from 10:19 a.m. until 1:30 p.m on Wednesday until the PSE’s clarification of the matter.
On Saturday, the PSE announced the signing of an underwriting commitment with BDO Capital and First Metro Investments Corp. on its P2.9-billion stock rights offering, suggesting that compliance with the ownership ceiling had been achieved.
A portion of the letter from SEC said a directive was issued to “correct the inaccurate and misleading information” regarding PSE’s disclosure posted on Feb. 26.
For its part, the PSE issued another statement on Wednesday detailing how it would reduce brokers’ ownership to comply with the 20-percent cap.
“The company has already revoked the status of, and declared vacant the trading rights of inactive trading participants, who are also shareholders, constituting about 2.34 percent of the total outstanding capital stock,” the PSE said.
“The SEC, on the other hand, is currently completing the process of revoking the registration of these shareholders if they will not amend their primary purposes to that of a nonbroker business business.”
An upcoming stock rights offering, wherein the PSE will issue 11.5 million common shares to external investors, will reduce the brokers’ ownership to 22.05 percent. This figure includes the shares owned by brokers whose trading rights have been revoked by the PSE and which are undergoing administrative procedures with the SEC.
“After the SEC completes its process, the broker shareholders further go down to below 20 percent,” the PSE said.
The P2.9-billion stock rights offering to be launched by the PSE, apart from diluting the cumulative shares of stockbrokers, will fund the PSE’s takeover bid for Philippine Dealing Systems Holdings Corp., the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp., Philippine Depositary and Trust Corp. and Philippine Securities Settlement Corp.