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Friday, March 29, 2024

SEC raises questions on merger of bourses

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The Securities and Exchange Commission is not yet ready to give its nod on the merger of Philippine Stock Exchange and Philippine Dealing System & Holdings Corp. because it may undermine competition.

“It is really the issue of competition, especially since we have a new competition law. We are mindful that the unification of two exchanges might result in dominance by a single entity,” SEC chairman Teresita Herbosa said in a news briefing.

Herbosa said there should also be a timetable for the PSE to comply with the ownership requirement, as provided under the Securities Regulation Code.

Under the SRC, no single industry or business group should own more than 20 percent of an exchange. PSE is asking for an exemptive relief from the SEC regarding the rule.

Herbosa said the corporate regulator wanted to determine if the unification of the two exchanges would really benefit the public in terms investing in the capital markets.

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“We cannot just give the license now and give conditions post-requirements. If we are going full steam ahead of the unification of two exchanges, everything should be in place before approval,” she said.

PSE has been waiting for SEC’s approval for the merger of the two exchanges, after the bourse signed share purchase agreements with major shareholders of PDSHC, including Bankers Association of the Philippines and Finex Research and Development Foundation Inc.

Closing date for the agreements was targeted not later than Nov. 27, 2015.

The SPAs are subject to SEC approval.

PSE president Hans Sicat last month said he expected PSE to acquire as much 95-percent stake in PDSHC, the operator of the country’s markets for fixed-income securities and foreign exchange.

Aside from BAP and Finex, other PDSHC shareholders that expressed intention to sell their shares to the PSE were Singapore Stock Exchange, Golden Astra, Tata Consultancy Serves Asia, Computershare Technology Services, The Philippine America Life and General Insurance Co.,  Social Security System and  Investment House Association of the Philippines.

The buyout PDS shareholders by PSE will  pave the way for the merger of the equities and fixed-income exchanges.

Sicat said the acquisition would enable the PSE to consolidate products and services and make the domestic stock exchange a larger entity on a consolidated basis.

PSE and PDS have been in talks for possible merger for several years now. 

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