By Arra B. Francia, Reporter
SMALL INVESTORS can look forward to greater participation in companies’ initial public offerings (IPO) after the corporate regulator approved changes to listing rules in this regard.
In a memorandum posted to its Web site on Thursday, the Philippine Stock Exchange (PSE) said the Securities and Exchange Commission has approved amendments to the Consolidated Listing and Disclosure Rules that, among others, increase local small investors’ (LSIs) maximum IPO subscription to P100,000 from P25,000 previously.
“The revised rules for the local small investor program rationalized the program and updated the applicable limits for the program,” PSE Chief Operating Officer Roel A. Refran said via text.
“The access by the LSIs… will be at the same terms and conditions as the rest of the investing public. The revisions present a fair and standard framework for the investing public.”
The PSE defines an LSI as one who is “willing to subscribe to a minimum board lot and whose subscription does not exceed P100,000.”
At least 10% of the entire IPO should be allotted to LSIs and issuers should prioritize subscriptions within this allocation of those investing less than P100,000.
For IPOs exceeding P5 billion, the PSE may opt to increase LSIs’ subscription cap “on a case to case basis… to help facilitate greater participation and subscription to the LSI allocation.”
The new rules also require issuers to employ share “clawback” or “clawforward” mechanisms in the event of over- or under-subscription in LSIs’ 10% allocation.
Alongside the increase of allowed subscription for LSIs, the PSE is requiring issuers to provide an appropriate distribution mechanism for greater participation of small investors nationwide.
The PSE first raised the matter of increasing subscriptions for LSIs back in 2016 in the face of IPOs’ increasing offer size as well as the public’s rising investment interest and capacity.
Analysts said the amended rules could attract more investors into the market, even though current volatility could weigh on sentiment.
“It only makes sense for PSE to adjust the maximum subscription to account for the growing familiarity of these small investors with the facility, as well as to accommodate the public’s growing savings level and increasing propensity to invest,” Reginal Capital Development Corp. Analyst Rens V. Cruz II said in a mobile phone message.
Timson Securities, Inc. Trader Jervin S. De Celis said in a separate text message that “small investors will get the opportunity to get at least a bigger share in the pie when investing IPOs.”
Philstocks Financial, Inc. Research Head Justino R. Calaycay, Jr. expects the rules to positively impact future IPOs. “That will give more room for individuals to participate in IPOs. However, given the current times, IPOs in general don’t seem attractive. For those who have investible funds, raising the cap would be a positive,” he said in a separate text.
The PSE index has lately been trading within a 7,500-7,800 range, a far cry from its peak of 9,058 last January. While the main index gained 0.92% or 68.17 points to 7,517.37 on Thursday, it was still 17% lower than its record high posted at the start of 2018.
“If we look at the precarious level of the market right now as well as the internal and external factors that influence the recent move of the index, I think market participants will stay cautious until they see signs of recovery in the market,” Mr. De Celis explained.
For Regina Capital’s Mr. Cruz, the market’s general weakness may present retail investors with buying opportunities. “In reality, from an investors’ point of view, the recent slump of the market can be seen as a buying opportunity, a good entry point to position into stocks that have reduced its valuation. If you’re an investor, you’re looking at prospects long-term, and you enter at dips, such as the recent weakness of the market.”

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