PSE seeks to raise IPO allotment for small investors
THE Philippine Stock Exchange (PSE) is amending its listing rules to quadruple the maximum allowable investment for local small investors (LSI) to boost participation among retail investors.
A consultation paper uploaded on the PSE Web site on Tuesday showed that the bourse is tweaking the investment allotment for LSIs to as much as P100,000 or an “amount that may be allowed by the exchange, on a case to case basis, to help facilitate greater participation and subscription to the local small investor allocation.”
The LSI program, which mandates issuers to allocate at least a tenth of their entire initial public offering (IPO), is a mechanism to allow small investors to participate in first time share sales. Investments under this program are capped at P25,000 per investor.
“The Exchange believes that the maximum allowable investment under the LSI program needs to be updated as well to be indexed against the increasing offer size and the investing capacity of investors,” the PSE said.
The bourse acknowledged that the size of maiden share sales have grown over the years. This means that the required number of investors to take up the 10% allocation has also increased.
“The Exchange proposes to allow a maximum investment per LSI that is applicable to the offer size. By indexing the maximum to the offer size, we hope to increase the total take-up of the LSI allocation,” the PSE added.
The PSE is soliciting comments on the proposed amendments to the listing rules until Dec. 29.
The Shareholders Association of the Philippines (SharePHIL), a group pushing for investor protection, welcomed the development to jack up the threshold for investment of small investors.
“More importantly, however, is the monitoring mechanism to ensure that unscrupulous stock market players do not break up their money into several one hundred thousands to unduly avail of the small investors program,” SharePHIL President Francis Ed. Lim said in a mobile phone message.
“If that happens, the objective of the program, which is to expand the local investor base, will not be achieved,” Mr. Lim added. —