SEC clears PH stock, bond trading unification plan

MANILA  -The Philippine Stock Exchange (PSE) won the blessing of the Securities and Exchange Commission (SEC) to pursue negotiations to fully acquire Philippine Dealing System Holdings Corp. (PDS Group), clearing a major obstacle in the nearly decade-long push to unify the country’s equities and debt markets.

Previous efforts by the PSE to take over PDS Group, which owns the country’s bond trading platform, were blocked by the SEC since this would breach the 20-percent ownership cap under the Securities Regulation Code.

But during a meeting on Nov. 21, the Commission En Banc “resolved to allow PSE to apply for exemptive relief from the mandatory limit on ownership and voting rights in an exchange by an individual or an industry once negotiations for the buyout of the PDS Group have been favorably concluded.”

Fixed-income exchange

The PSE, which currently owns nearly 21 percent of PDS Group, aims to acquire 100 percent of the country’s fixed-income exchange.

It came close to buying more shares in 2017 through the acquisition of a more than 20- percent stake held by the Bankers Association of the Philippines (BAP) and affiliates. However, the deal did not push through given regulatory hurdles.

While that buy-in valued 100 percent of PDS Group at about P2.2 billion, the company was likely worth more today given the large interest in bond listings while interest rates were elevated.

Total bond listings this year had already exceeded P172 billion, which was nearly double the P92 billion in capital raised on the PSE during the first nine months of 2023.

PSE chief operating officer Roel Refran said earlier this month that unifying the PSE and PDS was beneficial to the investing public and the development of the Philippine capital market.

He said consolidating both exchanges makes the PSE a “one-stop shop” offering multiple asset classes.

After the PSE, the biggest stockholders of PDS Group are the BAP members and institutions (21.01 percent) and Singapore Exchange Ltd. (20 percent).

They are followed by Tata Consultancy Services Asia (8 percent), Whistler Technologies Services Inc. (8 percent), San Miguel Corp. (4 percent), The Philippine American Life & General Insurance Co. (4 percent), Citicorp Financial Services and Insurance and Brokerage Phils. Inc. (3.1 percent), Development Bank of the Philippines (3.08 percent), Financial Executives Institute of the Philippines Research and Development Foundation (3.08 percent), Social Security System (1.54 percent), IHAP and IHAP IFT Members (1.04 percent) and other stockholders (2.14 percent).