PSE still non-compliant with 20% ownership cap

MANILA, Philippines — The Securities and Exchange Commission (SEC) said the Philippine Stock Exchange (PSE) is still non-compliant with the ownership limit set in the Securities Regulation Code (SRC).

As of Feb. 28, the PSE’s total broker shareholdings stood at 21.71 percent or above the 20 percent limit, the SEC said.

Thus, even after completion of the PSE’s stock rights offer, the exchange still falls short of the 20 percent industry limit by 1.71 percent.

PSE last week said it had diluted its ownership in the stock exchange to 20 percent already following its recently-concluded rights offering.

The SRC requires a 20 percent limit on ownership of an exchange by any industry or business group.

SEC said that when the PSE first initiated its plan to acquire the PDS Group in 2013, it was aware that, to gain ownership and control of PDS, it would have to comply with the ownership limitations imposed by the SRC.

The PDS operates the country’s fixed income exchange.

“Five years later, the PSE remains non-compliant with the 20 percent industry ownership limit,” the SEC said.

The SEC had also asked the PSE to address certain issues before it could acquire the PDS. These include issues on the monopoly ownership by PSE of both the equity and fixed income exchanges, high depository fees, use of name on central depository (NOCD) and the clearing and settlement issues.

The PSE wants to merge the two exchanges to be at part with global practices and to deepen the country’s capital markets.

It is competing with state-owned Land Bank of the Philippines, to acquire the PDS Group.

Accordding to the SEC, both the PSE and Landbank need exemptive relief from the PSE to be able to acquire the PDS Group.