PSE implements real-time broker ownership monitoring

THE local bourse has implemented new measures that will keep it within the prescribed broker ownership limit, in line with the single industry rule under the Securities Regulation Code (SRC).

The Philippine Stock Exchange, Inc. (PSE) said in a statement over the weekend that it has included real-time broker ownership monitoring through the trading system. This automatically prevents trading participants from placing a buy order for PSE shares should their accounts exceed the 20% limit for broker industry ownership.

Item C of Section 33.2 of the SRC states that “no person may beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange.”

“We intend to observe the prescribed broker ownership limit in PSE by putting in place safeguards that will help us with this goal,” PSE President and Chief Executive Officer Ramon S. Monzon was quoted as saying in a statement.

Other measures include the regular updating of brokerage firms’ Customer Account Information Form, to disclose the relationship of clients to other trading participants, such as the directors, officers, and principal stockholders.

The PSE will monitor the accounts of related persons of broker dealers, including their subsidiaries and affiliates, directors, officers, principal stockholders, and nominees to the PSE, as well as their spouses and relative up to the fourth civil degree of consanguinity.

The exchange has earlier proposed to amend the PSE Rules Governing Trading Rights and Trading Participants, asking trading participants to abide by the Securities and Exchange Commission (SEC)’s Rules Governing Trading of PSE shares.

This entails penalties of up to P300,000, in addition to suspension of trading operations for at least five days for the third and subsequent offense.

“While we have identified the appropriate measures to ensure that broker ownership remains below 20 percent, we call on our trading participants to help and support us in ensuring that the legal requirements are strictly observed,” Mr. Monzon said.

The PSE initiated efforts to bring down broker ownership in 2017, when it was still working on getting the SEC’s approval for its proposed acquisition of the Philippine Dealing System Holdings Corp. (PDSHC).

The PSE-PDSHC merger, however, is not likely to push, through as the state-run Land Bank of the Philippines also intends to purchase the fixed-income exchange with the backing of the Department of Finance. —