New PSE officers urged to win back confidence of members

The Securities and Exchange Commission is challenging the new leadership of the Philippine Stock Exchange (PSE) to win back the confidence of its broker-members and to work towards the bourse’s immediate compliance with capital market reforms needed to regain the trust of the investing public.

The PSE elected Friday a new board of directors with the group of broker Alicia Arroyo winning all seats reserved for broker-directors in the exchange’s 15-man board. Arroyo was appointed as the third chairwoman of the PSE.

Commenting on the successful election of a new board, SEC Chairman Lilia R. Bautista said: "The first thing they should do is to win back the confidence of the brokers to ensure a peaceful atmosphere and that the PSE operates normally."

Bautista said the infighting among PSE brokers is driving away local and foreign investors and is giving the exchange a bad name.

The SEC chief also urged the new PSE board to re-educate broker-stockholders who refuse to acknowledge the fact that the bourse is no longer theirs. "They should make sure that the brokers know all the issues. There should be an education campaign that the exchange is no longer theirs alone. They no longer have the luxury to do as they wish," Bautista said.

Bautista said after the exchange was demutualized in August 2001, there is supposed to be a decrease of broker influence. She cited a Securities Regulation Code provision which provides that no industy or business group may beneficially own or control more than 20 percent of the voting rights of the exchange.

To comply with the 20 percent ownership cap under the SRC, the PSE is required to offer its shares to other group of investors through an initial public offering.

To date, only the conversion of the PSE from a non-stock to a stock corporation has been accomplished. The divestment and listing which has been required to be carried out immediately has yet to be complied with by the exchange.

In order for the PSE to compete globally and be at par with other exchanges in the world, Bautista has asked the new board to beef up the exchange’s compliance and surveillance department.

"They have to strengthen their compliance and surveillance arm because we feel there are some brokers who are doing some manipulation. They should go after these brokers," Bautista said.

"If the new board is really for reforms then they should make sure that there is no stock price manipulation. They should also strengthen the rules so it would be easy for them to detect any violations," Bautista added.

Echoing Bautista’s sentiment, former PSE Chairman Vivian Yuchengco has called on all brokers to cooperate with the new management to ensure the smooth operations of the exchange.

"Now that the war in the Middle East is coming to an end, opening new perspectives for the Philippine economy and a return to growth, I hope that we will also be able to find peace among ourselves for the good of our institution. The coming months will see if the Philippines can handle this opportunity. All of us share a big responsibility. Can we muster the will and garner the momentum to keep on with the reform agenda that is so much needed if we want to regain the investors’ confidence? Or shall we continue our inability to unite and tackle the challenges that lie ahead of us?" Yuchengco said.