SEC Chairperson Lilia R. Bautista said the PSE should finalize the specific rules of the dollar board to jumpstart the operation of the dollar trading facility which has already secured approvals from both the Bangko Sentral ng Pilipinas and the SEC.
The dollar trading board, which is seen to encourage more foreign investor participation, will allow trading for stocks listed in other foreign markets.
It is also seen to pave the way for cross-border listing or the trend of multiple listing of companies across different markets in the world.
Under the 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.
Initially, the trading facility will accommodate trade for cross-listed shares such as phone firm Philippine Long Distance Telephone Co., Canadian insurance firms Manulife Financial Corp. and Sun Life of Canada. These stocks are listed on the New York Stock Exchange. Sun Life and Manulife are also traded in the Toronto and Hong Kong stock exchanges, aside from its Philippine and US memberships.
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 expand and connect local players to the overseas markets.
The PSE intends to establish the dollar board by Sept. 16, coinciding with the launching of the "New Exchange", an ambitious roadshow to promote and revive the investor interest in the local bourse.
The exchange will review the performance of the dollar board after six months from opening the facility to determine its impact on the capital market and submit a report to the BSP.
With the facility, the PSE aims to address the lack of interest of foreign investors in the Philippine market and help the county’s ailing investment value or potential and the exchange’s experienced downturn in trade volume.
The DDT facility is also seen to eliminate foreign exchange risk since there is no need to convert currency for both buy and sell transactions. In effect, proceeds of these transactions may be remitted out of the country liberally. –Zinnia de la Peña