Stock, bond bourse union finally clears regulatory hurdle

The Philippine Stock Exchange (PSE) can now begin a formal takeover bid for the Philippine Dealing System Holdings Corp. (PDS) after the government cleared all regulatory obstacles.

The nearly decadelong push to unify the country’s equities and debt markets gained ground after the Securities and Exchange Commission (SEC) waived ownership limits that had previously foiled efforts by the PSE to raise its nearly 21-percent stake in PDS, which owns the country’s bond trading platform.

This so-called exemptive relief was granted by the SEC during an en banc meeting on Dec. 19.

This will allow the bourse to exceed the mandatory limit of 20 percent and own up to 100 percent of PDS, subject to certain conditions.

“In light of the approval, the commission en banc directed PSE to submit the status of its negotiation on its acquisition of additional PDS shares every two months, including share offer price, among others,” the SEC said in a statement.

“The PSE must also submit its operational and developmental plans and timeline in relation to the fixed-income market,” it added.

Joseph Roxas, veteran stock broker and president of Eagle Equities Inc., said the development could help lower expenses such as custodian fees being charged by PDS unit Philippine Depository & Trust Corp.

Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., also welcomed the news since this would strengthen and deepen the country’s capital markets.

“An integrated bourse would enable the PSE to offer efficient listing and trading solutions across a variety of securities, including equities, bonds and eventually options,” he said.

Chinabank is one of the shareholders of PDS Group.

The SEC has the power to grant exemptive relief “if such ownership or control will not negatively impact on the exchange’s ability to effectively operate in the public interest.”

“In its initial submissions to the commission, the PSE committed to ensuring that the acquisition will operate in the public interest, as the resulting integration of the country’s equity and fixed-income exchanges would allow for the delivery of more efficient and more types of products, services and better risk management systems for financial services,” the corporate regulator said.