SEC issues listing, trading rules for dollar-priced securities

THE SECURITIES and Exchange Commission (SEC) has approved the framework for the listing and trading of dollar-denominated securities (DDS), giving an alternative fundraising venue to companies and another investment option to the public.

In a press statement, the regulator announced the approval during a Nov. 10 en banc meeting of the rules governing the listing, trading and settlement of securities priced in US dollars on the Philippine Stock Exchange (PSE).

“The introduction of DDS aims to provide issuers with dollar- denominated requirements an opportunity to raise capital without incurring foreign exchange risks,” the regulator noted in the statement distributed to reporters on Monday.

“The DDS can also reduce the currency risk exposure of foreign investors who trade PSE listed securities. Moreover, DDS offers local investors an alternative investment option for their US Dollar currency holdings.”

The PSE released the draft of the rules, which spell out disclosure guidelines and relevant fees, in March to solicit comments from the public.

The bourse has existing rules for dollardenominated trading. The framework approved in July 2003, however, provided only a platform for securities simultaneously listed offshore to be quoted and traded in dollars.

Under the recently approved rules, DDS can be issued by listed companies in good standing with the PSE.

Prospective issuers, for instance, must have no outstanding penalty or liability to the bourse.

Also, companies looking to issue DDS must be free of any order of suspension from trading or involuntary delisting proceedings. They must not be subject of any pending case, investigation or similar proceeding by the PSE for violation of applicable laws, rules, regulations or orders.

The issuers will have to engage at least two brokers qualified to trade DDS. To become eligible, a trading participant of the PSE must comply with certain requirements such as attending a DDS training session or seminar and issuing a sworn certification of its operational readiness.

Brokers must also maintain a US deposit account or foreign currency deposit unit and a separate US dollar settlement account for clearing of trades as well as open a separate US dollar cash collateral deposit account for DDS.

“The procedures for securities deliveries are the same as with peso-denominated securities. However, settlement shall be denominated in US dollars,” the SEC noted.

“Thus, brokers intending to participate in the trading of DDS are required to have a US dollar deposit account with any universal or commercial bank, and a separate US dollar cash settlement account with the designated settlement bank.”

In addition, brokers must submit an undertaking to obtain the consent of clients to the disclosure of their names to the SEC upon request in the course of an investigation, examination, official inquiry or as part of official surveillance or compliance with other pertinent laws.

The brokers will have to include DDS transactions in the Market End of Day Reports generated by the stock exchange.

Del Monte Pacific Ltd. has disclosed plans to offer DDS on the PSE even before the SEC approved the rules governing the issuance and trading of such securities.

The company, which concurrently trades on the Singapore Exchange Main Board, intends to raise as much as $ 360 million by issuing such securities. It plans to issue $250 million worth of preferred shares initially. —