SEC nixes PSE rule on brokers' votes in open board seats

MANILA, Philippines -  The Philippine Stock Exchange (PSE) is opposing a Securities and Exchange Commission (SEC) directive limiting the rights of broker-shareholders to vote for broker candidates running for open seats in this year’s annual elections of the local bourse.

At the same time, the PSE said the SEC’s position limiting the rights of brokers as an industry group to 20 percent of the total outstanding capital stock of the exchange is still subject of litigation.

In a statement yesterday, the PSE board said the SEC had no basis in law to impose that only non-brokers shall be eligible to vote for the broker candidates running for seats that can be occupied by either a broker or a non-broker.

The PSE had asked the commission en banc to reconsider and approve the 2011 Nominations and Elections Committee rules without the said provision.

Last year, the Philippine Association of Securities Brokers and Dealers Inc. (PASBDI) appealed its case on the 20 percent voting limitation to the Pasig Regional Trial Court, which in turn granted PASBDI a temporary restraining order. The SEC, however, elevated the case to the Court of Appeals where it is currently pending.

Under the Securities Regulation Code, no single industry should own more than 20 percent of the exchange’s total outstanding capital stock. Individual investors, on the other hand, are limited to a maximum of five percent stake each in the PSE.          

As of January 2011, brokers own about 33 percent of the stock exchange.

The PSE board of directors is composed of 15 directors with a term of one year. Under the Securities Regulation Code, the board of an exchange must be composed of the president of the exchange, at least three independent directors, trading participants and persons representing the interests of issuers, investors and other market participants.