Change the PSE's ownership - Sketches

Malacañang should be careful in going after the scalp of Securities and Exchange Commission Chairman Perfecto Yasay Jr. If they turn him into a martyr, he might run for the Senate next year and win, and that could mean a bigger headache for Malacañang.

Remember Dante Tan and Best World Resources Corp.? Because of crisis after crisis in the stock market, we've almost forgotten about the start of this mess -- the investigation of insider trading and stock manipulation involving BW. Other scandals have evolved from the original, one of which we've almost forgotten, too -- President Erap's phone calls last year to Yasay, asking about the status of the probe on BW, telling Yasay that Tan is no stock manipulator but a victim.

Those phone calls, disclosed by Yasay to the Senate, highlighted what many have suspected all along: that there's no level playing field in the Philippine stock market.

This led to brokers accusing each other of whitewash, insider trading and stock manipulation. It led to a mass resignation and Yasay finally ordering the indefinite suspension of trading. Where in the world can you find a stock market as lively as this?

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Now we're back where we started, with Yasay once again accusing Malacañang of interference in SEC affairs. The wisdom of keeping the chaotic bourse open last Wednesday is debatable, but the administration can't deny that it interfered. And we're no closer to stopping insider trading and stock manipulation in the Philippine Stock Exchange.

As I've already written, I don't see any character in this sordid drama coming off clean. Even Yasay and his mutinous commissioners must share the blame for the machinations of what PSE vice president Ruben Almadro referred to as the Old Boys' Club of brokers in the bourse. There was a failure of regulation here. But Yasay's departure -- even President Erap's premature departure from office, for that matter -- will not cure the ills of this bourse.

PSE president Jose Luis Yulo Jr. said we should be happy that the exchange is finally investigating its own members in a case of stock manipulation. This indicates to you how serious the problem is, and I don't think it can be cured merely by changing the SEC chairman or PSE officials.

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One proposal that makes sense is to open the PSE's ownership to non-brokers. The proponents point out that stock markets in Hong Kong, Singapore and Australia are owned by the players themselves. Yulo said about 70 percent of bourses in the international federation of stock exchanges are publicly listed, which promotes transparency and prevents the formation of any Old Boys' Club.

I was looking at pictures of the recent public offering in Hong Kong of Internet company Tom.com, which is connected with the island's most powerful businessman, Li Ka-shing. Thousands of people thronged banks to put their hard-earned money in the new company. That's investor confidence. You watch and weep with envy. Will we ever see such public interest in the stock market here? The PSE index continued to drop yesterday.

Yulo said the PSE is looking at models of publicly listed stock exchanges. But in this country, looking is a long way from doing. Yulo himself is on the way out.

Will the Old Boys' Club agree to cede control of the stock exchange to market players? The buzz at Malacañang is that the passage of the Securities Reform Act is being delayed precisely because of a strong lobby from influential brokers.

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This stock market is dead, because all the people who brought it to ruin continue to call the shots and refuse to change. They've grown extremely rich mismanaging the bourse -- Yulo said you need at least P5 billion to manipulate the market -- and aren't about to let go of their money-making machine.

I still have some money stuck in this market, and I'm still hoping to recover my investments. Filipinos hope that disaster will compel much-needed drastic reforms, that the Securities Reform Act will finally be passed (as promised yesterday by congressmen), that this stock exchange can be saved.

Now if President Erap can only lay off the market...