New PSE chief makes PDS takeover a priority
THE NEWLY ELECTED president of the Philippine Stock Exchange (PSE) is making the completion of its takeover of the Philippine Dealing System Holdings Group (PDS) a top priority.
Ramon S. Monzon, independent director and chairman and president of Carousel Productions, Inc., which organizes the Miss Earth beauty pageant, was elected as the bourse’s president and chief executive officer during the annual stockholders’ meeting on Saturday. He replaced Hans B. Sicat, who stepped down after six years.
“The biggest challenge facing us now is getting the regulatory approval for our purchase of PDS, and when that is accomplished, the even bigger, more difficult task would be how to integrate the operations,” Mr. Monzon said in a press briefing on Saturday, adding he has a self-imposed deadline to complete the deal by July.
The PSE is now in the process of complying with the requirements set by the Securities and Exchange Commission (SEC) for exemptive relief, as well as requirements from the Philippine Competition Commission (PCC). It is also settling a case filed against the PDS in the Supreme Court.
The PSE must secure exemptive relief from the corporate regulator as the law limits entities to own only 20% of an exchange due to competition concerns. The SEC has earlier rejected the PSE’s request for exemptive relief, after the bourse supposedly failed to determine the “synergies and efficiencies that will indeed translate to meaningful benefits to the investing public and issuers.”
The PDS acquisition, valued at P2 billion, needs approval from the PCC as the commission is tasked to review all mergers over P1 billion to ensure fair competition in the market.
Mr. Monzon, who is also a PDS director, said they are in continuous talks with the anti-trust body. “They want to review the transaction and see any problem with this combination,” he said.
The PDS, which serves as the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depositary and Trust Corp. (PDTC) and Philippine Securities Settlement Corp., must further divest from its government securities business, which was questioned in an anti-monopoly suit filed in the Supreme Court back in 2014.
“Before we conclude the transaction, we’re working on the settlement of the case,” Mr. Monzon said.
After completing the requirements, Mr. Monzon the next step would be to integrate the systems under the PSE.
“Because when you acquire a company, you’d like to have a good integration, so you get the synergies that you’re hoping for when you bought the companies,” he added.
Mr. Sicat will be tapped to manage the integration of the Philippine stocks and bond exchanges.
“We’re hopeful that we’ll be able to comply with the requirements in good time… We want to finish the transaction as soon as possible,” Mr. Monzon said.
Asked if there are plans to introduce new products, the new PSE chief said they are looking to increase the number of companies raising funds through dollar-denominated securities, which was launched this year.
“We’re trying to reach out to them, to see if that is a good vehicle for them to raise funds,” Mr. Monzon said.
Mr. Monzon also pledged to reduce the brokers’ ownership in the exchange to around 20% from around 28%. Among the options being mulled include asking brokers to sell to nonbrokers, private placements and offering preferred voting shares.
PSE Chief Operating Officer Roel A. Refran said the bourse is also continuing to refine the rules on short selling as well as introduce structured warrants.
“There’s a lot of interest from the market participants to allow for a hedging mechanism, subject to certain standards,” Mr. Refran said, saying they had delayed the release of rules on short selling back in 2009 due to the global financial crisis.
“Now we’re on more normalized environment… that’s up for discussion again,” Mr. Refran added. —