PSE sees dilution of broker ownership to below 20%

The Philippine Stock Exchange Inc. (PSE), the operator of the local bourse, sees the dilution of its broker ownership in the exchange to below 20 percent.

PSE chairman Jose Pardo said this is a reform that would finally happen after so many years.

“This is a reform that has remained unresolved for many years. It took no less than Finance Secretary (Carlos) Dominguez to ensure that full compliance is finally achieved,” Pardo said.

Toward this end, the PSE signed on Friday the firm underwriting agreement with BDO Capital & Investment Corp. and First Metro Investment Corp. for the conduct of its stock rights offering (SRO).

With the SRO being firmly underwritten, the SRO shares would be fully subscribed and would result in the dilution of broker ownership in the exchange to below 20 percent, said PSE president and CEO Ramon Monzon.

“The firm commitment of our underwriters to our SRO effectively reduces the ownership of brokers in the exchange to below 20 percent. Compliance with the Securities Regulation Code (SRC) on the 20 percent maximum broker ownership in the exchange has finally been achieved,” Monzon said.

The PSE is offering 11.5 million shares in the SRO to all its existing shareholders as of March 1 at P252 per share from March 12 to 16.

Broker shareholders would not be allowed to participate and subscribe to the offered shares, Monzon said.

This is to ensure that the whole objective of the SRO, which is to comply with the SRC provision that no single industry can own more than 20 percent of the voting rights of a stock exchange.

Monzon said the road to compliance was a long multi-step process, which concludes with the SRO.

He admitted that it took time because there was due process.

“It took time as part of the process involved the revocation of the trading participant status of inactive brokers and this required a period of six months to afford said inactive brokers with due process. But we were committed and focused all throughout the process and we are happy to see its completion and conclusion,” he said.

“We are introducing monitoring and trading mechanisms, including the necessary system automation to ensure that broker ownership limits in the exchange will no longer be breached moving forward,” he added.

He expressed optimism the PSE would be able to usher in a more developed capital market in the Philippines with all the initiatives it is undertaking.

“Many new things are happening at the exchange and we are quite excited to enter this new chapter in our history as we work towards a more developed capital market for the benefit of the nation and the investing public,” Monzon said.