The Securities and Exchange Commission (SEC) said Thursday it granted the Philippine Stock Exchange (PSE) an exemptive relief that will enable it to acquire full ownership in Philippine Dealing System Holdings Corp. (PDS).
The SEC said in a statement it approved PSE’s application for an exemption from the 20-percent cap in the ownership of a single industry in an exchange subject to certain conditions.
One of the conditions is for the PSE to submit a status of its negotiation on its acquisition of additional PDS shares every two months, including share offer price, among others.
The PSE should also submit its operational and developmental plans and timeline in relation to the fixed income market, the SEC said.
It also required the local bourse to provide the commission regular updates, including updates on timelines of concrete plans, on its commitments, such as reduction in fees, valuation, enhancements of systems and launch of new products every three months following the acquisition.
The PSE owns 20.98 percent of the issued and outstanding capital stock of PDS Holdings, the operator of the country’s fixed-income trading platform. The PSE seeks to acquire up to 100 percent of PDS to unify the capital markets.
Other major shareholders of PDS are Singapore Exchange Ltd., Bankers Association of the Philippines, Tata Consultancy Services Asia, Whistler Technologies Services Inc. and San Miguel Corp.
Under Section 33.2(c) of Republic Act No. 8799, or the Securities Regulation Code (SRC), no person may beneficially own or control, directly or indirectly, more than five percent of the voting rights of the exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the exchange.
The SEC, however, may adopt rules, regulations or issue an order, upon application, exempting an applicant from the ownership limit if such ownership or control will not negatively impact on the exchange’s ability to effectively operate in the public interest.
The PDS Group includes the Philippine Dealing & Exchange Corp. (PDEx).
PDEx, incorporated in 2003, operates the organized secondary market for the trading of fixed-income securities issued by corporations, as well as the government.
PDEx also calculates the Philippine Dealing System treasury reference rates, which form the basis for valuing and marking-to-market interest rate-sensitive instruments.