PSE may require stabilization fund for IPOS, FOOS

THE Philippine Stock Exchange Inc. (PSE) said it will hold public consultations starting next week for several new rules, including a new requirement that calls for the allocation of a stabilization fund for initial public offerings (IPOS) and follow-on offerings (FOOS).

PSE President Ramon S. Monzon said the move is part of the exchange’s mandate of investor protection and to make it easy for individual investors to place their money in the equities market.

“We take our investor protection responsibility very seriously. Like any IPOS or any offering, we can’t tell investors if this is a good offering or bad offering. We’re in a disclosure regime organization, meaning we make sure that companies adequately and properly disclose everything,” Monzon said during the PSE’S Investment Expo 22.

Starting this week, Monzon said it will solicit public comments to make it mandatory for companies doing an IPO or an FOO to have a stabilization fund of 15 percent of its proceeds. This is applicable only for those that has secondary offering component.

He said the new rule is an offshoot of a recent IPO, which he said “did very poorly.” Monzon did not mention the firm, but among those that launched an IPO, it was Medilines Distributors Inc. which saw its share price plunged by 30 percent on its market debut.

Medilines closed Friday at P1.03 per share, far below its IPO price of P2.30 per share.

Monzon said the PSE also wants to plug a loophole in its rules wherein companies may reduce its par value right before they conduct an IPO so they can offer their shares at a much lower price.

“For retail investors, there’s the psychology that if it is cheap price, it’s a good value. A few companies have done this and we want to plug that loophole,” he said.

By next month, the PSE will introduce two new sub-indices—the high-yielding index and the mid-cap index, which seek to entice indexlinked tracker funds that offer liquidity in the market.

Other new initiatives include the introduction of data analytics platform in March, the launch of PSE Easy platform 2.0 that include share rights offering and FOOS and also integrate a payment platform, an E-KYC or know your customer procedure for broker that allow brokers to electronically do its confirmation of the identity of its clients without the need for them to go into the brokers’ offices.