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PSE eyes 2016 ASEAN linkup

Posted on February 16, 2015

KUALA LUMPUR -- The Philippine Stock Exchange (PSE) is not yet ready to link up with Southeast Asian bourses this year, its chief executive said, with participation possible in 2016 instead as it seeks to clear hurdles and expand its products to match those offered by other equity markets in the region.

Hans B. Sicat, president and chief executive officer of the Philippine Stock Exchange, said if the Securities and Exchange Commission is admitted to the International Organization of Securities Commissions this year, “it means that we’d have to figure out how we can move... by next year” to link up with Southeast Asian peers. -- BW File Photo
The PSE is “waiting” for corporate regulator Securities and Exchange Commission (SEC) to become a member of the International Organization of Securities Commissions (IOSCO), the Paris-based international body made up of the world’s securities regulators.

The Philippines had been seeking IOSCO membership since 2008, which would serve as a vote of confidence that its local regulations governing stocks are in line with global standards and would facilitate cross-border transactions.

“So if they (SEC) do that -- let’s say, by this year or by the end of the year -- it means that we’d have to figure out how we can move in by next year,” PSE President and Chief Executive Officer Hans B. Sicat said in an interview here on Feb. 12.

Chief executives of the so-called ASEAN Exchanges -- formed by six members of the Association of Southeast Asian Nations (ASEAN) that want to link up their bourses -- met in Malaysia on Feb. 11-12 for a dialogue on how to integrate the region’s capital markets.

The ASEAN Trading Link connects the stock markets of six ASEAN members to promote them as a single asset class.

The link, which went live in 2012, so far involves just three bourses: the Stock Exchange of Thailand, Bursa Malaysia and the Singapore Exchange.

The PSE, the Indonesia Stock Exchange, as well as the two equity markets of Vietnam -- Hanoi Stock Exchange and Ho Chi Minh Stock Exchange -- have yet to join the trading link.

“We’re really looking forward to our SEC completing that exercise. So if they get that (IOSCO membership), that would be a good condition for us to evaluate now,” Mr. Sicat said.

The IOSCO develops, implements, and promotes adherence to internationally recognized standards for securities regulation, according to its Web site.

The securities regulators of Thailand, Malaysia and Singapore are all members of the IOSCO board, according to the Paris-based international body.

SEC Commissioner Teresita J. Herbosa had said in July last year that the Philippines hopes to attain full membership by November 2015, as the IOSCO board still has to assess if SEC is “compliant.”

Ms. Herbosa had said at the time that the Philippines could be part of the ASEAN Trading Link by 2015 once it clears IOSCO.

The PSE announced its plan to join the ASEAN Trading Link as early as 2008, but postponed its participation indefinitely as it sought more time to improve trading volumes and implement reforms.

In 2013, it implemented a three-year plan that would transform it into a “world-class” exchange and make it at par with its peers.

The three-year plan includes introduction of more products such as the exchange-traded fund and the list of Shariah-compliant stocks, the planned merger of the local stock and fixed-income markets, and the implementation of an electronic disclosure system.

Asked if the attainment of all the targets in the three-year plan would be sufficient for the PSE to join the link, Mr. Sicat replied: “Yes, we have a lot of things to do.”

“We should be able to make most, if not all, of what we planned for ourselves.”

Bursa Malaysia Chief Executive Officer Tajuddin Atan, who spoke at the conference in Kuala Lumpur, noted stock markets in the region should be able to link up in due course.

“The solution is to allow participants to come in at different stages,” he said, reflecting ASEAN’s traditional preference for allowing members with varying development levels to participate in regional schemes at their own pace.

“Collaborative competition is the unique characteristic of ASEAN,” he explained.

“We are all looking at greater share of investment flows in ASEAN, but we also want to grow independently in our own countries.” -- Daphne J. Magturo