Bank exec: PSE-PDS merger to strengthen capital market

CEBU, Philippines - The plan to unify the country's equity and fixed-income trading platforms will make the capital market more competitive, said a top official of the Bankers Association of the Philippines.

In an interview late Wednesday, BAP President Lorenzo V. Tan said the merger still awaits the regulatory approval from the Securities and Exchange Commission.

 "We're now down to the last hurdle — the SEC," Tan told The FREEMAN.

 "The regulators just want to make sure that it's something that won't be disruptive in the future and that it's compliant with recent laws like the anti-monopoly law," added Tan, who is also the president and CEO of Rizal Commercial Banking Corp.

 Earlier reports said the Philippine Stock Exchange (PSE) already submitted final documents to SEC to get regulatory clearance for its proposed takeover of Philippine Dealing System (PDS) group, the holding company that owns the country's fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx). PDEx is the trading platform for corporate bonds, government treasury paper and foreign exchange.

 Other subsidiaries of PDS are Philippine Depository and Trust Corp. (PDTC) and Philippine Securities Settlement Corp. (PSSC).

 Tan emphasized the merger will be beneficial for the capital market in general. "I think you get the benefit of a common platform and economies of scale and it's more aligned with the practices in developed markets," said Tan when asked how it will benefit the country's capital market.

 For instance, he cited Singapore that has only one holding company that operates the trading of its equities, bonds, derivatives and commodities.

 "It's an opportunity to move towards a more nimble, safer capital markets platform," the BAP official said.

 Tan said the merger needs SEC's approval of the exemptive relief from the 20 percent limit on ownership by PSE of the PDS.

 The corporate regulator has yet to issue a final decision on the proposed merger.

 The PSE seeks to raise its ownership in PDS after the full acquisition.

 "The ownership [of PSE] will be more than 20 percent of the bond exchange," Tan said.

 In July 2015, the PSE had finalized a deal to buy BAP's 28.91 percent stake in PDS.

 PSE and PDS began negotiations for the merger as early as May 2013.

 Tan explained the process of PSE's full takeover of PDS has already taken three years because of many shareholders of the latter.

One of them is the Singapore Exchange Ltd. which, Tan said, already agreed to sell its 20 percent stake in PDS to the stock exchange. (FREEMAN)