THE Philippine Stock Exchange (PSE) is hopeful it can close its merger with the fixed income bourse before the year ends, as it faces only one more regulatory hurdle.
This statement follows the Philippine Competition Commission (PCC)’s recent announcement that it has cleared the merger of the PSE and the Philippine Dealing System Holdings Group (PDS Holdings), allowing both parties to move forward with the transaction.
“I hope it will happen by the end of the year, the reason I say that is because the PCC has cleared the deal. So that’s one regulatory obstacle that we have overcome. So the next is the SEC (Securities and Exchange Commission) exemptive relief,” PSE President Ramon S. Monzon told reporters in a press chat in Makati City last week.
The SEC has required the PSE bring down broker ownership to secure exemptive relief. Brokers currently own 27.9% of the bourse. For this, the PSE has committed to conduct a stock rights offering by February to bring down the ownership of trading participants to less than 20%.
“We filed a registration statement with the SEC… SEC knows all the filings that we made. There can be no doubt with the compliance plan. So hopefully it just involves a little more dialogue, a little more explanation, and if we’re successful on that before the end of the year, hopefully we can get exemptive relief from the SEC,” Mr. Monzon explained.
The PSE official said existing brokers will not be allowed to avail of the stocks, automatically diluting the ownership of trading participants.
The issuance involves 11.5 million shares in the PSE, which could raise P2.8 billion in funds for the bourse. Mr. Monzon said they tapped BDO Capital & Investment Corp. and First Metro Investment Corp. for the offering, with book-building scheduled for January and listing at the PSE slated for February.
“So with our computation, with the 11.5 million shares that we will be offering as stock rights, we believe the final ownership of the brokers of the PSE would be a little less than 20%. The 20% is the required statutory requirement. But we believe that we will actually achieve less than 20%,” Mr. Monzon said.
To recall, the PSE has been holding talks with the PDS group and various regulatory boards to make the merger of the two markets possible. Within this period, the PSE has been able to increase its ownership in the PDS group to around 60%.
The PSE said the merger of the two markets would help them achieve synergies in operations.
“For the market, the single exchange set-up helps achieve efficiencies, reduce risks, and facilitate the development of new products,” the PSE said in an earlier disclosure. — Arra B. Francia
