Alternative investment instrument: PSE readies launch of dollar stocks

MANILA, Philippines - The Philippine Stock Exchange Inc. (PSE) is setting the stage for the issuance of dollar denominated securities (DDS).

The introduction of DDS aims to provide issuers the flexibility to meet their capitalization requirements. It also offers an alternative instrument for investors with US dollar deposit accounts.

DDS can also attract offshore investors and reduce their currency risk exposure.

The PSE is now seeking comments and suggestions from stakeholders on its draft rules on DDS.

PSE president and CEO Hans Sicat said the move is part of the exchange’s efforts to expand its line of products and services offered to the investing public.

“The introduction of [DDS] listing in the exchange is in line with our thrust of providing more products and services for the market. With this product, we want companies to have the flexibility of raising capital in dollars while at the same time, providing both foreign and local investors the ability to trade in the market without necessarily facing foreign exchange risks,” Sicat said.

Under the proposed rules, companies who are already listed at the exchange can issue a new set of securities, either common or preferred shares, which are quoted, traded, and settled in US dollars.

The proposed rules cover the listing and disclosure, trading, clearing and settlement, and fees for this new type of product.

“We encourage our stakeholders to take part in this consultative exercise so that the rules we will put in place will be most suited to the requirements of the market,” Sicat said.

 Under the proposed rules, the DDS issuer must be an existing listed company and must obtain approval from the Bangko Sentral ng Pilipinas. Brokers must have foreign currency deposit unit accounts to be eligible to trade DDS.

Interested parties have until  March 22 to submit their comments on the proposed  rules. Comments and suggestions received will be collated and taken into consideration in the drafting of the rules that will be sent to the Securities and Exchange Commission for approval.