PSE eases rules on ETF listing

MANILA, Philippines - The operator of the country’s stock exchange will tweak the guidelines on the listing of investment vehicle exchange traded funds (ETF).

The revisions in existing rules are seen to facilitate the debut of more ETFs in the local bourse, Philippine Stock Exchange (PSE) officials said.

For instance, PSE president and CEO Hans B. Sicat said the requirement for an underwriter will be removed.

“Unlike a regular company which is doing an initial public offering, an ETF is like the analog of a mutual fund wherein you have an underlying particular amount,” Sicat said, adding that ETFs are not raising funds for the first time.

Sicat said the removal of the underwriter requirement makes it easier to encourage more ETF issuers without compromising the initial success of launching an ETF.

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

“We also removed the paid-up capital requirement for an authorized participant provided it’s not a market maker,” said PSE chief operating officer Roel A. Refran.

A market maker is a broker-dealer firm that facilitates equity transactions. It takes on the risk of holding a certain number of shares of a particular security.

Sicat said that the guidelines should make it easier, clearer and logical to roll out ETFs.

In June, the Securities and Exchange Commission approved the guidelines on the launching of ETFs.

ETFs 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.

In December, the Metrobank Group’s First Metro Investment Corp. listed its ETF unit in the PSE. FMIC initially debuted with a capitalization of P750 million, which can be jacked up to P3 billion.