PSE freezes introductory listing rules

MANILA, Philippines - The Philippine Stock Exchange (PSE) has temporarily suspended the implementation of its rules on listing by way of introduction to allow it to plug the loopholes in the existing rules.

PSE chairman Hans Sicat said the rules are currently being reviewed and sees the suspension taking effect for about a few weeks.

“We are reviewing the rules on listing by way of introduction. It will just be a matter of weeks. The PSE needs to make sure that the rules are consistent and clear so that issuers can be guided correctly and at the same time to ensure that the investing public is fully informed of the developments with the issuers,” said Sicat.

He also pointed out that the timing of the temporary suspension “is convenient” since there are no new applications for listing by way of introduction currently in the pipeline.

Leading online gaming publisher IP E-Game was the last company to list by way of introduction. Its shares had a spectacular run-up in the stock market last week, rising by as much as P135 from only P50 each share. The stock closed three percent lower yesterday at P112 per share compared with Friday’s close of P115.

An industry observer, who requested not to be named, said he is opposed to this scheme that allows companies to list without having to go through an initial public offering (IPO) of shares, pointing out that such arrangement is susceptible to price manipulation since the shares are controlled only by a select few.

The review followed a dramatic increase in the share prices of companies that resorted to this listing method. 

Ayala-led electronics manufacturing company Integrated Micro-Electronics Inc., which listed in January using the same tack, also saw its share price surge more than 10-fold to P68 each share. It closed at P16 apiece yesterday, more than twice the firm’s opening price of P6.20 each share.

The PSE, however, said it would continue to process and apply the rules to applications for listing by way of introduction filed before the suspension took effect.

This is the second time that the PSE revised its rules on listing by way of introduction. Under the revised rule, companies that goes through this strategy will be required to conduct a public offering and comply with the minimum public ownership requirement within one year from listing.

The public ownership requirement will depend on which board the company plans to list its shares as well as its total market capitalization.