Stock brokers keen to revive operations at less capital

Mark Securities Corp., owned by the Dayrit family, is seeking a reduction in the minimum paid-up capital requirement for brokers to allow it to revive its trading operations.

Aside from Mark Securities, another broker firm that announced its intention to re-enter the equities market is JP Morgan. The foreign brokerage house hopes to resume trading operations in the Philippines in July pending compliance with requirements.

Sources said local brokerage Highlands Securities is also keen on reviving trading operations. Philippine Stock Exchange (PSE) records show that there are 132 active brokers.

Mark Securities voluntarily suspended trading operations in September 2002 due to poor market conditions.

In a letter to the PSE, Mark Securities sought the reduction of the unimpaired paid-up capital to P40 million from P100 million.

Under the rules, new entrants and those that are planning to return to the brokerage business must have a minimum paid-up capital of P100 million while existing brokers shall have a paid-up capital of at least P50 million.

In its bid to resume trading operations as soon as possible, Mark Securities has sought the help of the PSE to bargain with the Securities and Exchange Commission.

Brokerage firms that suspended operations since 2000 are planning to make a comeback in the equities market, driven by improving market conditions and better-than-expected macroeconomic indicators.

According to the Philippine Association of Securities Brokers and Dealers Inc. (PASBDI), the umbrella organization of securities brokers and dealers, the existing P100 million paid-up capital is too high and anti-Filipino since only foreign brokers and big Filipino-owned broker firms can comply with this requirement.

Some of these broker firms plan to reactivate their seats to allow them to sell to other interested investors now that the market is gaining strength on an improving economic environment.

Listed among the inactive broker firms in the PSE’s website include EBC Securities, Citicorp Securities International and KGI Securities Phils.

Trading value in the PSE jumped 162 percent for the first five months of the year to P196.5 billion from P74.9 billion the previous level. The figure already accounts for 95 percent of the full year 2004 level of P206.6 billion.

On a sectoral basis, the mining counter registered the highest growth rate in value turnover, surging by 8,340 percent to P12 billion from only P100 million. This showed that the mining sector clearly benefited from the December 2004 Supreme Court ruling that upheld the constitutionality of the Philippine Mining Act of 1995 and the Financial and Technical Assistance Agreements (FTAAs) between the government and foreign mining firms.