PSE keen on pushing through with index policy changes

MANILA, Philippines — The Philippine Stock Exchange Inc. (PSE) is keen on pushing through with the planned revisions to its index policy, subject to further discussions with relevant stakeholders, with its effectivity likely taking place next year.

“We will go ahead with it. In what final form, (we’re) not yet there. There’s one or two points that we want to get back to again on those who submitted comments,” PSE president and CEO Ramon Monzon told The STAR.

Monzon said there are still issues that the PSE is ironing out with stakeholders.

The PSE in June solicited comments from key stakeholders such as fund managers and certain foreign and local brokers on possible revisions to its index policy or the rules for inclusion in the main 30-company PSE index.

“In the end, we solicited comments from who I believe are the relevant stakeholders. When I say relevant, who are they? They are the fund managers because they have the index tracker of funds. We solicited comments from the biggest bank fund manager BPI, from the biggest insurance company Sun Life, from foreign brokers like UBS and CLSA, from the biggest local broker which is COL. So we’re collating all these comments,” Monzon said.

“They have a few suggestions. In general, it’s like they agreed with our proposal,” he said.

One of the proposed changes is the easing of the public float rule for inclusion in the index, wherein companies worth at least P120 billion will be allowed to stay in key stock indexes even if only 15 percent of their shares are publicly traded, lower compared to the 20 percent currently required.

The move increases the likelihood that large and liquid companies can be included in the PSE indexes even if their free float is lower than the minimum free float requirement for index inclusion of 20 percent.

The PSE earlier said that only after the comments are received and evaluated will the company consider if there is even a need to change its present index rules.

Monzon said the PSE will come out with the changes in the index policy at an appropriate time, giving assurance that “everybody will be given enough time to adjust.”

“So it’s October. Let’s say I come up with something. I’m not going to implement that by December. If I come up with something by the end of this year or by November, I told my index team, we should probably make its effectivity date June. Give them five months or so,” the PSE chief said.

“Us on our end, we want to make sure that when we change our index policy, it must be benchmarked against the best: MSCI, FTSE, S&P Global. So as long as we are benchmarked with (them), it’s hard to criticize us,” he said.

Early this year, the PSE announced the inclusion of two new firms – China Banking Corp. and AREIT Inc. – in the main 30-company PSE index as a result of the January to December 2024 index review, which took effect on Feb. 3, 2025.

The companies replaced Nickel Asia Corp. and Wilcon Depot Inc. which became constituents of the PSE MidCap index.

The PSE said that a listed firm must be among the top companies in terms of liquidity and market capitalization to qualify for inclusion in the indexes.

Further, it should maintain a free float level of at least 20 percent of its outstanding shares. Relevant financial criteria are likewise considered by the PSE in evaluating the index composition.