THE Philippine Stock Exchange, Inc. (PSE) has prohibited brokers from buying the company’s shares, after new data showed that broker ownership in the exchange was higher than the limit set by the Securities Regulation Code (SRC).
The bourse operator said in a disclosure Monday that actual broker ownership stood at 26.44% out of 84,997,899 outstanding shares as of Feb. 28. This is higher than the 20% industry limit set by the SRC.
“Upon review of the data submitted by brokers, the certificates revealed that approximately 7.26% of outstanding shares, including 3.38% acquired under PSE’s stock rights offering, were held by brokers’ principal shareholders and related parties in omnibus client accounts,” the PSE said.
The exchange said that since these were not included in broker’s proprietary accounts, they were not accounted for in the broker ownership report it previously submitted.
PSE Chief Operating Officer Roel A. Refran said earlier this year that broker ownership had already been lowered to less than 20%.
Item C of Section 33.2 of the SRC states that “no person may beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange.”
The PSE has implemented a real-time broker ownership monitoring through the trading system last January, as part of its efforts to bring down the industry’s stake in the exchange. The system automatically prevents trading participants from placing a buy order for PSE shares should their accounts exceed the limit.
Bringing down broker ownership was one of the necessary requirements to get the Securities and Exchange Commission’s approval for the PSE’s proposed acquisition of the Philippine Dealing System Holdings Corp. (PDSHC).
The PSE-PDSHC merger, however, is not likely to push through as the state-run Land Bank of the Philippines also intends to purchase the fixed-income exchange with the backing of the Department of Finance. — Arra B. Francia