New dollar board draws 3 listed firms

With the successful launch of the dollar-denominated trading (DDT) board yesterday, at least three listed companies (including a blue-chip stock) have signified interest to list on the DDT in the hope of attracting more foreign and local investors.

PSE president Ernest Leung said three companies have already applied for listing at the DDT board but the exchange has yet to determine whether they would allow these firms to trade considering that their shares are not listed abroad.

Leung said the PSE will consult with the Bangko Sentral ng Pilipinas (BSP) to discuss the monetary issues involved.

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) was the first issue to be listed on the DDT. The company’s shares are traded at the New York Stock Exchange as an American Depositary Receipt (ADR).

"The upbeat mood in the trading floor, with more foreign activity with a net foreign buying of almost P3 billion for the past month and a half and our market being one of the strongest performers in the region, is a sign that PLDT’s debut in the DDT is off on a good start," PSE chairman Alicia Morales-Arroyo said in a speech delivered before the launch of the DDT facility yesterday.

Arroyo said the trading of DDT securities is seen to inject more liquidity into the market and eliminate currency or foreign exchange risks and the cost for conversion of ADRs.

"We hope to further boost the market, especially from foreign investors with the number of benefits that come with the facility. It will provide an alternate arbitrage environment, eliminating the difficulties in ADR or GDR conversions well as BSP reporting requirements," Arroyo said.

Arroyo said the DDT facility is also seen to pave the way for cross border trading and settlement. Next to PLDT, shares of Manulife Financial Corp. and Sunlife Financial of Canada will be traded under the DDT facility. Additional issues or instruments may thereafter be listed upon the determination and approval of the listing committee of the exchange.

In the meantime, the trading and settlement with dollar denominations will strictly be for offshore issues which are listed on foreign exchanges such as the US, Canada, Hong Kong and the UK.

The dollar board opens simultaneously with the regular trading hours of the PSE from 9:30 a.m. to 12 noon.

Under the rules, trading participants buying on the DDT facility shall always issue an original buy invoice per client or investor in adherence to the foreign exchange regulations of the (BSP).

The original buy invoice shall be the basis for determining whether payment to the selling trading participants by the designated DDT cash settlement bank shall be dollars or pesos.

Orders to be posted shall be limited to a maximum of $250,000 per order. A separate index will be created for the DDT.

The opening price for each security shall be computed daily by Maktrade the same way that the opening prices are computed in the peso board.

Trading participants are required to open securities sub-accounts with the Philippine Central Depository for the DDT shares. These accounts shall be used for the credit of DDT shares or to segregate the DDT shares from the peso shares.

The DDT facility, according to the PSE, will lessen the vulnerability of the stock market to international shocks and may generate additional income for the exchange through trading and other miscellaneous fees.

With the DDT, the threat of unforeseen major dollar outflows accruing from portfolio foreign investments perceived to be hot money will be eliminated.