PSE steps up ETF info drive

MANILA, Philippines - The Philippine Stock Exchange (PSE) is stepping up its information campaign as it prepares market participants for the launch of its new investment product, the exchange-traded funds (ETFs).

The operator of the country’s sole stock exchange said it has been conducting seminars as part of its market education efforts to make the public aware of the features of ETFs.

“The next critical step in our ETF program is to educate the public of what ETFs are all about,” said PSE president and CEO Hans B. Sicat.

“ETFs provide many advantages to investors and it is for this reason why it has remained to be one of the fastest growing asset classes globally,” Sicat said.

Late last month, the PSE conducted its first seminar about ETFs. The next forum for trading participants is scheduled on July 19.

Another big event that the PSE has lined up is the Philippine ETF Investment Convention on July 30. PSE invited foreign ETF experts to share their ETF experience as well as the best practices in other jurisdictions.

“All registered salesmen are required to undergo ETF training prior to trading ETF shares,” PSE said.

Last month, the Securities and Exchange Commission (SEC) approved the final set of guidelines that will allow the launching of ETFs.

ETFs are securities and investment instruments that monitor a commodity of assets like an index fund but trades like a normal stock in an exchange.

“Now that the Philippine regulatory framework for ETFs has been finalized, we can officially start accepting listing applications from prospective ETF companies,” Sicat said.

“I know a lot of market participants have waited long for this product to be offered to investors and we are now all working hard to ensure that we meet the expectations of the market,” Sicat added.

At least three firms, First Metro Investment Corp. of the Metrobank Group, Sy-led BDO Unibank Inc. and Bank of the Philippine Islands of the Ayala conglomerate have expressed plans to offer ETFs.

ETFs are seen to offer several advantages and investment options to investors including liquidity especially for those who cannot directly access specific sectors in the market due to a country’s specific regulatory environment.

PSE said that for retail investors, ETFs allow for a cheaper access to a diversified portfolio of stocks because investors do not have to buy multiple stocks.

The proposed ETF listing rules, which is governed by the general ETF guidelines issued by SEC in October, provides for transparency and investor safeguards that adhere to the International Organization of Securities Commissions and best practices in other jurisdictions.

Prior to listing in the local bourse, minimum paid-up capital for ETFs should be P250 million.

ETFs will be exempt from the listing requirement that new offerings should allot 20 percent of the shares for trading participants and 10 percent mandatory allocation for local small investors.

To continue being listed in the local bourse, the ETF should maintain a public float of 10 percent of the issued and outstanding shares, exclusive of treasury shares.