Merger of stock, bond, forex bourses set

MANILA, Philippines—The Philippine Stock Exchange (PSE) may complete its long-overdue takeover of the country’s bond bourse before the end of the first semester, bringing closer to fruition the creation of a single market for all financial instruments in the country.

Lorenzo V. Tan, president of the Bankers Association of the Philippines (BAP), said more than half of the Philippine Dealing System (PDS) Group’s shareholders have agreed to the merger with PSE.

“We’d like to turnover my chairmanship to Hans in the next three months if possible,” Tan said, referring to PSE president Hans Sicat.

The PDS Group is made up of parent company Philippine Dealing Systems Holdings Corp. and operating subsidiaries Philippine Dealing and Exchange Corp. (PDEx), Philippine Depository and Trust Corp. (PDTC), and Philippine Securities Settlement Corp. (PSSC). The group controls the country’s markets for fixed-income securities and foreign exchange.

The PSE, meanwhile, is the sole market for equity securities in the Philippines.

The BAP and Singapore Exchange Ltd., operator of Singapore’s financial markets, are two of PDS Group’s biggest shareholders, with about half of its stock. Tan said 54 percent of PDS’ former shareholders, including BAP, have sold their holdings to the PSE. He declined to reveal other details.

One of the main goals of the merger was cutting costs, Tan said. Eventually, all financial market transactions are envisioned to go through a single platform, making it safer and more efficient to invest in the Philippines.

This unity is backed by local economic managers due to the potential of unlocking higher volumes. This is in line with financial markets’ main purpose of diverting capital where it is needed most.

Merger talks between the PSE and the PDS Group have been ongoing since 2012. However, legal questions arose following a Supreme Court restraining order banning government regulators, PDS and the BAP from allegedly restricting government securities trading activities and other over-the-counter (OTC) transactions.

This stemmed from an anti-trust suit filed by former lawmakers Aquilino Pimentel Jr. and Luis Villafuerte, together with former Budget Secretary Benjamin Diokno, among others, against PDS.