Proposed public float hike revived
THE SECURITIES and Exchange Commission (SEC) could increase the minimum public ownership requirement for listed firms from the current 10% starting next year in a bid to put them on par with counterparts in Southeast Asia, SEC Chairperson Teresita J. Herbosa told reporters on Friday last week.
Ms. Herbosa said the corporate regulator intends to increase the minimum public float require- ment annually by five percentage points starting next year until the 25% target is reached in three years at the earliest.
The SEC was supposed to implement the higher public float requirement this year, but adverse market conditions globally prompted the corporate regulator to put the plan on the back burner, Ms. Herbosa said.
“We’re also aware of what’s happening in the stock market now — the major correction — so we will defer that in the meantime and start anew maybe in 2016,” she said.
Twin concerns of a normalization of monetary policy in the United States and an economic slowdown in China wiped out the benchmark Philippine Stock Exchange index’s (PSEi) gains for the year after peaking at 8,127.48 on April 10, involving a 12.4% year-to-date gain.
As of Friday, however, the blue-chip index was down 4.4% to 6,911.38.
The commission’s Market Securities and Regulatory Department (MSRD) has recommended the increase in the minimum ownership requirement to 25%, the average level observed by other markets in Southeast Asia, Ms. Herbosa said.
The SEC and PSE had long said the minimum public float could rise further after they reinstated the 10% floor in 2011 in a bid to boost liquidity and increase public participation in the local equities market.
As the deadline for compliance expired in June 2013, state-run PNOC Exploration Corp. was the lone company that failed to meet this requirement. Consequently, its shares were delisted from the bourse.
Listed firms enjoy a preferential tax rate of 0.5% and are exempted from the documentary stamp tax.
Meanwhile, Ms. Herbosa said the commission en banc is set to decide if it will penalize the PSE for last month’s unprecedented trading stoppage. “Once he’s back, he can look at report of our MSRD and we will have to make a decision then at the en banc level on whether penalties are appropriate under the circumstances,” Ms. Herbosa said, referring to Commissioner Ephyro Luis B. Amatong, who oversees capital market regulation and has been attending out-of-town conferences. “If ever we come across what we think will be the proper solution, even if that will mean some expense on their part, they have to comply.”
Trading was halted three times last month, with Aug. 25’s nearly five-hour outage being the longest to hit the exchange in its entire history. The bourse said the problem stemmed from the software that sends information from the base trading engine to front- end terminals — and not from the new platform developed by NASDAQ OMX Group, Inc.