PSE to introduce separate board for dollar-denominated issues

The Philippine Stock Exchange (PSE) will introduce before the end of the year a separate board for the trading of dollar-denominated securities, providing a new spin in the country’s stock market trades.

PSE chairperson Vivian Yuchengco said they intend to establish the dollar board by Sept. 16, coinciding with the launching of the "New Exchange," an ambitious roadshow to promote and revive the flagging investor interest in the local bourse.

However, she admitted that the specific rules and guidelines of the dollar board still have to be finalized, although the proposal has been approved by both the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas (BSP) in October last year.

Under the dollar denominated trading (DDT) facility, the PSE will allot an extended off-floor trading session in the afternoon for the trading of securities linked to the Philippine market.

These securities will be initially restricted to trades in the New York-listed PLDT and the Canadian insurers Manulife and Sun Life, but may be expanded to additional issues or instruments such as "B" shares of local companies.

Other local stocks listed overseas are Benguet Corp., First Philippine Fund, Philex Gold (Canada) and Ionics EMS (Singapore).

Aside from enhancing the mix of the PSE’s trading portfolio, which at present is limited to local equities and government bonds, the DDT will also expand and connect local players to the overseas markets.

The set up will likewise introduce an attractive environment for cross-border investments in the country and hence prepare the Exchange for the said infrastructure, the PSE official said. At present, a regional cross-border trading is being pilot tested in Singapore and Australia.

One of the provisions in the dollar board is that foreign exchange should not be bought from banks but instead sourced from the Foreign Currency Deposit Unit (FCDU) accounts or paid in cash.

"The offering of the facility aims to eliminate exchange rate volatility risks by enabling trades to be strictly denominated in US dollars, from actual trade execution to final settlement," the PSE official said.

She added that by providing an additional market to its potential participants, depending on the performance or the success of the facility, the DDT is also expected to help shore up the local bourse’s anemic volume and steady downturn. – Conrado Diaz Jr.