PSE seeks other options to spread ownership of stock exchange

The Philippine Stock Exchange (PSE) said it continues to evaluate all options that would enable it to comply with the ownership limit for exchanges under the Securities Regulation Code (SRC).

Under the SRC, no individual can own more than five percent of the exchange and no single business group can hold more than 20 percent.

Noting that only 0.75 percent of the PSE shares have been traded since its listing by introduction last Dec. 15, the Securities and Exchange Commission (SEC) has directed the exchange to "take the necessary steps" to comply with the securities law. Prior to its listing by introduction, the exchange was almost wholly-owned by the stockholders.

The SEC further ordered the exchange to consider "offering to institutional groups a percentage of its unissued shares at a reasonable price" or "making a public offering."

The local bourse, however, said it will continue to entertain discussions with any party signifying interest in acquiring a stake in the PSE but any arrangements must be fair and beneficial to all concerned.

The PSE is holding talks with a number of foreign exchanges for a possible strategic investment in the local bourse. The move is also in line with PSE’s efforts to enhance its trading system and to make its shares more attractive to investors.

SEC Chairman Lilia R. Bautista earlier warned that the commission may be forced to impose a deadline for the exchange to meet the 20-percent single industry shareholder ownership limit if brokers refuse to sell their shares.

Each of the 184 member-brokers were given 50,000 shares in exchange for their seats in the PSE following the local bourse’s conversion from a mutually-owned company into a stock corporation in 2001.

To ensure full compliance with the ownership cap, the SEC has issued an order prohibiting broker-dealers from purchasing shares for their own account or the account of their subsidiaries and affiliates and their directors, officers and principal stockholders and the spouses and relatives up to the fourth civil degree.

The order also prohibits broker-dealers from reacquiring PSE shares through any other means from third persons for their account or for the account of their related persons.

Apart from the Philippines, other Asian countries that have listed their exchanges are Singapore, Hong Kong, Australia and New Zealand.

In 2002, the PSE earned P27.96 million from its listing-related charges, its main source of revenue. The amount is 52.87 percent higher than the P18.29 million registered in 2001.

In light of the increasingly competitive environment in which it operates, the PSE has drawn up a business plan designed at further increasing its revenues, enhancing its operational efficiency and further strengthening market integrity.