THE Philippine Stock Exchange, Inc. (PSE) will be launching a mobile application to maximize participation from local small investors during initial public offerings (IPOs) by December, according to a top official.
PSE Chief Operating Officer Roel A. Refran said the app will make sure local small investors can fully exercise the 10% allocation they have for IPOs.
PSE’s listing rules state that at least 10% of the entire IPO should be allotted to local small investors. Issuers must also prioritize subscriptions for this group.
“We’re already testing that this month. By December, I’ll be happy to show it to you… This is for IPOs only,” Mr. Refran told reporters on the sidelines of a forum in Makati on Oct. 19.
Mr. Refran said the app will be available for use by next year, since no companies are expected to brave the market until the end of the year.
With the app, investors can submit their subscription forms for IPOs. The PSE is also working on automating the payment process. For now, investors will still have to pay through banks and present a reference number generated by the app.
The mobile app is in line with the PSE’s efforts to encourage more participation from small investors, which could further boost market liquidity. In September, the bourse operator secured approval from the Securities and Exchange Commission to amend the Consolidated Listing and Disclosure Rules, increasing the maximum subscription of local small investors to P100,000 from just P25,000 previously.
The revised rules will also allow the PSE to increase local small investors’ subscription cap for IPOs exceeding P5 billion. The “clawback” or “clawforward” mechanism can also be applied in the event of over or under-subscription in their 10% allocation.
The PSE has also ordered issuers to provide an appropriate distribution mechanism to support the participation of small investors nationwide.
In a separate memorandum earlier this month, the PSE also ordered companies seeking to conduct a follow-on offering to provide a price range — instead of the current practice of indicating only the maximum price — to better guide small investors on the possible changes in the final offer price.
“The objective of the Exchange is to protect small investors by informing them that pending final determination of the offer price, they should be guided by the disclosed price range in any transaction prior to the price-setting date,” the PSE said.
The PSE’s Stock Market Investor Profile showed that less than one percent of the country’s population invest in the stock market, counting only 868,810 stock market accounts in 2017, albeit rising by 12.4% from year-ago figures. Retail and institutional accounts accounted for 96.9% and 3.1%, respectively.
The PSE said it is conducting more market education initiatives to encourage both local and foreign individuals to invest in equities. — Arra B. Francia
