Bourse takes 2nd look at $ facility

The Philippine Stock Exchange (PSE) is reviewing whether it should scrap its dollar-denominated trading (DDT) facility amid lukewarm response from investors.

PSE president Ernest Leung said the exchange is evaluating the feasibility of its DDT facility and is looking at ways on how to make it profitable and attractive to investors.

Leung said there was only one transaction at the DDT since its launch last July 16. The transaction involved 300 shares of Philippine Long Distance Telephone Co. (PLDT) done at $10.25 per share.

Investors have stayed away from the DDT due to problems in settlement procedures and pricing transactions because of unstable foreign exchange rates. The DDT follows the fluctuations of peso stocks but it is denominated in dollars.

The DDT facility was initiated by the bourse through its settlement committee to provide greater flexibility and efficiency in the present trading infrastructure.

The PSE received the approval of the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) for the board in October 2001. BSP gave its go-signal on the condition that the PSE and its designated cash settlement bank will provide weekly reports on the daily transactions of the dollar board.

The DDT was meant to expand the market for Philippine issues over the long-term and diversify PSE’s product offerings.

It was also meant to create an attractive environment for cross-border investments into the country and spur greater activity and volume in the equities market.

Cross-border listing refers to the practice by companies to list in several stock exchanges across the globe.

The dollar board is also seen to eliminate currency or foreign exchange risks and the cost for conversion of American depository receipts (ADR) and allow multiple currencies for trade transactions.

The PSE said earlier that it may soon consider listing shares of even those companies that are not yet listed abroad to allow multiple currency trading. This, however, would have to be approved by the BSP and SEC.

Next to PLDT, shares of Manulife Financial Corp. and Sunlife Financial of Canada are expected to be traded under the DDT facility. – Zinnia dela Peña