PSE may seal PDS deal by yearend—monzon

THE Philippine Stock Exchange Inc. ( PSE), the operator of the equities trading market, expects its deal with the Philippine Dealing System Holdings Corp. ( PDS) to conclude before the end of 2024.

PSE President and CEO Ramon S. Monzon said they have not restarted the negotiations with the minority shareholders, mainly composed of local banks, as their power of attorney with the Bankers Association of the Philippines had expired.

“So the BAP now is renewing that ( power of attorney) with the banks. Until that happens, I don’t want to talk to 24 different sectors. We’re waiting for that,” Monzon told reporters in an interview.

Monzon said PDS has many shareholders, but most of them are banks.

“I am not talking to all 25 ( banks) because they have assigned a power of attorney to BAP. I am only talking to BAP for all the banks,” Monzon said.

“And of course, everybody’s doing their due diligence work now. We have some funds for that. I think we’ll have to probably take out a loan, depending on what the final price is.”

Monzon said the PSE had already struck a deal with the minority shareholders, but its negotiations hit a snag after it failed to secure regulatory approval in time.

This time, Monzon “reversed” the process and secured regulatory approval first before negotiating with the minority holders.

“I don’t want to waste their time again, or our time, and we won’t get the regulatory approval. But this time, we got the regulatory approval,” he said.

The Securities and Exchange Commission in December had approved the application of the PSE for an exemptive relief in its acquisition of additional shares in the PDS.

In its en banc meeting, the SEC allowed the PSE to exceed the mandatory limit of 20 percent on ownership and voting rights in an exchange by an individual or an industry, granting it leeway to own up to 100 percent of the PDS group, the operator of the country’s bond exchange platform.

The SEC also approved the transfer of the shares of stock of an exchange controller, to allow the PSE to acquire PDS shares currently held by other PDS shareholders.

Currently, PSE owns 20.98 percent of the issued and outstanding capital stock of the PDS. The stock exchange intends to acquire up to 100 percent of the operator of the country’s sole fixed- income exchange, and eventually merge the two platforms— the equities and the fixed- income exchanges.

The Securit ies Regulat ion Code indicated that no person may beneficially own or control, directly or indirectly, more than five percent 5 percent of the voting rights of the exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the exchange.

The PDS Group includes the Philippine Dealing and Exchange Corp. ( PDEX), which was incorporated in 2003. PDEX operates the organized secondary market for the trading of fixed- income securities issued by corporations, as well as the government. PDEX also calculates the Philippine Dealing System Treasury Reference Rates, which form the basis for valuing and marking- to- market interest rate- sensitive instruments.

In its initial submissions to the SEC, the PSE committed to ensure that the acquisition will operate in the public interest, as the resulting integration of the country’s equity and fixed- income exchanges would allow for the delivery of more efficient and more types of products, services and better risk management systems for financial services. VG Cabuag