Biz Buzz: Pruning gov’t securities dealers’ list | Inquirer Business

Biz Buzz: Pruning gov’t securities dealers’ list

/ 08:47 PM July 24, 2011

The banking community is abuzz with a paper drafted by capital market experts engaged by the Asian Development Bank to come up with proposals on how to improve the liquidity of the Philippine bond market. The paper, which was supposed to have been discussed in an ADB workshop last week, has triggered vibrant discussions as it circulated rapidly through e-mail.

One interesting recommendation in the draft report marked as “confidential” (drafted for workshop discussions only) is a drastic reduction in the number of primary dealers of government securities (GS) accredited by the Bureau of the Treasury to 10. Despite being a relatively small market, there are 43 primary dealers in the Philippines, 15 of whom are involved in 60 percent or more of GS auctions. On the other hand, there are 37 such primary dealers in Germany and 20 each in the United Kingdom and France, the report said.

Keeping a shorter list of accredited dealers, some banking sources agree, will make the system more competitive as each of the primary dealers is expected to work harder to remain on this “elite” list. At the same time, it will be easier to police such a smaller group, thus making it unnecessary to impose rigid market-making obligations. The report said the Treasury is indeed keen on reducing the number of primary dealers to as little as four to seven names but noted that a group of 10 would be “reasonable.”—Doris C. Dumlao


Heating up the PDEx debate


But what is even more interesting is the ADB paper’s lengthy discussion on the Philippine Dealing and Exchange Corp. (PDEx), a subject that has long divided bankers.

The report said it was “questionable” whether an exchange was the best venue for traditional over-the-counter products other than in respect of smaller traders, in particular retail.

The research does not believe that the liquidity of the Philippine GS market is best served by the current arrangement, noting that trading platforms, settlement, trade reporting and custody arrangements should all be subject to competition in order to drive down costs. “Where direct competition is not feasible, the association of dealers together with the [Treasury] should have the ability to replace monopoly suppliers,” the report said.

Some say the merger with the Philippine Stock Exchange to consolidate the local stock and equity trading platforms—as now being pushed by government economic managers—would address such concerns on monopoly.—Doris C. Dumlao

MVP’s joy…

Last weekend’s much-hyped Smart ultimate All-Star Weekend was supposed to be more star-studded than it was, but a crucial “pricing issue” got in the way.


According to our source, no less than basketball star Lebron James was the first choice of businessman Manny Pangilinan to topbill the event.

Unfortunately, the Miami Heat standout may have overplayed his card, with his agents reportedly asking for a $600,000 fee—equivalent to about P25.8 million at the prevailing exchange rate—for the two-game affair.

The source said that MVP “declined this asking price,” but immediately found an equally attractive star at a more reasonable price.

Enter the L.A. Lakers’ Kobe Bryant whose agents reportedly asked for $400,000—about P17.2 million—for the star to play in the event. Done!

Other NBA stars like Derek Fisher, Chris Paul, Tyreke Evans, James Harden, and Derrick Williams got $100,000 or about P4.3 million each, said our source.

Tickets to the event were scarce as Smart Communications reportedly scooped up the bulk of the choicest seats for distribution to “friends of the company.”—Daxim L. Lucas

… and woes

Despite having won a crucial ruling from the Supreme Court, critics of telecommunications tycoon Manny Pangilinan are not about to rest on their laurels, it seems.

Lawyer Arno Sanidad recently wrote the board of directors of PLDT asking for clarifications on the features of the so-called “voting preferred shares” that the company planned to offer in order to comply with the Supreme Court’s decision (which ruled that only shares with voting rights counted toward the foreign ownership rule, effectively putting PLDT in violation of the constitutional limit on foreign ownership of 40 percent).

The pointed questions raised by the lawyer end with an admonition that PLDT’s response to the queries would determine whether the lawyer’s group would oppose the motion for reconsideration that the company will file with the Supreme Court.

The question, of course, is… which business group is moving against MVP on this one? (According to reliable sources, it’s not the Ayalas, not San Miguel, and not Tony Boy Cojuangco. Guess who?)—Daxim L. Lucas

PAL is bigger?

Having more passengers in a year than any other airline in the country, Cebu Pacific has triumphantly proclaimed itself the largest Philippine carrier today.

The problem is, flag carrier Philippine Airlines (PAL) is not about to take this claim sitting down.

While conceding that it flew fewer passengers than its budget carrier rival, PAL notes that merely counting the number of tickets you sell is not the correct way of measuring an airline’s size.

In a recent statement, PAL said it bested its local competitors in international passenger traffic as it flew a total of 1.06 million passengers in the first quarter, figures from the Civil Aeronautics Board (CAB) show.

Translated into Revenue Passenger Kilometers (RPK), or number of passengers multiplied by distance traveled, PAL registered a total of 5 billion RPKs for the first three months of 2011. Of this number, 4.25 billion RPKs accounted for PAL’s international traffic, while the balance of 750 million RPKs represented the domestic sector.

This has led to PAL being named the world’s 61st largest airline. “The ranking is based on RPK, which is considered the true measure of airline passenger traffic,” the airline said in a statement.

PAL noted that Cebu Pacific was placed by Airline Business way behind PAL in global rankings at just 116th.—Paolo Montecillo

What’s in a name?

A few months ago, many were surprised when they saw their favorite coffee bun was no longer being sold at Delifrance. Everything looked the same at the place, the menu on the list the same, the servers the same, the prices the same. The only difference was the name of the place. Now it’s Cafe France.

No official statement was made to explain the change.

Biz Buzz accidentally stumbled upon the name of the new owner—a businessman with interests in banking, shipping, publishing and hotel operations.

Back to Deli… errr… Cafe France, which is a foreign chain… it used to be owned by Tony Tan Caktiong, founder of Jollibee Foods Corp. Many are wondering how the name change could have been done if everything else remains the same. Can a company simply change the name of the franchise yet keep everything else the same? If it’s not, who should complain, and where?—Margie Quimpo-Espino

Favoritism or coincidence?

Things are getting ugly between these two conglomerates vying for a parcel of government-owned land in an economically important city in the Visayas.

Allies of one side is now hinting at some alleged favoritism being shown by the local government for one of the bidders.

According to these people, one local personality lobbying for the project to be awarded to the perceived winner is the very same person who is set to build a P6-billion mixed-use project for the same conglomerate.

People on the ground point out that this person is not only influential because of his construction business, but is also—surprise, surprise—the nephew of a local government official who approved the deal.

Given this development, expect the other side to fire off its own salvo in the coming days.—Daxim L. Lucas

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TAGS: Air Transport, airlines, Banking, bond market, coffee shop, company, Government, ownership, Philippines, PLDT, Securities, Telecommunications

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