PSE eyes revisions in listing rules to protect investors

MANILA, Philippines — The Philippine Stock Exchange (PSE) is proposing to revise current listing rules to protect small investors. 

Under the plan, the PSE will require the disclosure of a price range for follow-on offerings. The range will consist of a minimum price  and a maximum price so that investors will be informed of the possible changes in the final offer price. 

“The requirement shall be limited to follow-on offerings of common shares and ETFs (exchange traded funds) because in initial public offerings, the issuer will not have a baseline price while in stock rights offerings, the price is usually determined by the issuer at the onset,” the PSE said in its proposed amendments. 

For preferred shares, the PSE said the offer price is not a material consideration for investors as they buy on the basis of the coupon rate, not the offer price. 

At present, the current listing rules do not require the disclosure of a price range for any type of public offering of equity shares. 

By practice, listed companies intending to conduct such public offering normally indicate the maximum number of shares to be offered and the maximum offer price in its prospectus and other offering documents. 

However, the PSE said small investors, in general, fail to recognize that the price disclosed in the offering documents is the ceiling and that the final offer price may be lower than the disclosed price. 

Investors may expect to realize capital gains considering the difference between the market price and the disclosed maximum offer price. 

Thus, the PSE said that having a price range would inform investors of possible changes in the final offer price. 

Such a proposal to impose a price range is consistent with the rules of Bursa Malaysia, Indonesia Stock Exchange and the Shanghai/Shenzhen Stock Exchange which all require a lower limit for follow-on offerings. 

Another proposed amendment is on the listing fee.

The current fee framework of the PSE for listing applications consists of the payment of a processing fee upon filing of the listing application and the payment of the listing fees after approval of the listing application.

On the other hand, the Securities and Exchange Commission (SEC) requires full payment of the related fees upon filing of an application for registration of securities, confirmation of exemption, or notice of exemption. 

The PSE is proposing to follow the SEC.

“We are rationalizing our existing fee framework with that of the SEC’s. In this regard, the Exchange proposes to require full payment of filing fees upon filing of the listing application. The filing fee rates shall be the same as the current listing fee rates, except the filing fees for initial listing under the Small, Medium and Emerging (SME) Board which shall likewise be aligned with the SEC fees,” the PSE said. 

The objective of the PSE is to align its fee framework with SEC’s framework without changing the current fee rates except the fee rate for initial listing under the SME Board.