SEC to PSE: Justify plan to acquire full ownership of SCCP

The Securities and Exchange Commission has asked the Philippine Stock Exchange to justify its plan to acquire full ownership of the Securities Clearing Corp. of the Philippines as this is contrary to an earlier directive of the commission requiring the Exchange to divest its shareholdings in the SCCP.

SEC Chairperson Lilia R. Bautista said the PSE must secure the approval of the commission of its plan to increase its stake in SCCP. "They have to justify that there is no point in our basis for them to divest their shareholdings in SCCP," she said.

The PSE board of directors earlier authorized management to negotiate with the other shareholders of SCCP for the swap of the SCCP shares with some of the PSE’s shares in Philippine Central Depository Inc. (PCDI).

The PSE currently owns 30 percent of PCDI worth some P60 million and 51 percent of SCCP worth about P5 million.

Minority shareholders of SCCP such as Rizal Commercial Banking Corp., Equitable PCI Bank and Citibank are also shareholders of PCDI.

Once the swap has been effected, the three banks will increase their stakes in the PCDI with the PSE’s stake in the PCDI reduced to 20 percent while ending up with full ownership of SCCP.

Apart from this, the PSE board has authorized management to negotiate for the acquisition of a new clearing and settlement system intended to reduce the settlement period from the current three days after trade.

The new system will integrate the functions of both the central depository as well as the central and settlement systems currently being managed by the PCDI and the SCCP, respectively.

PSE president Ernest Leung said the proposed system will be cheaper to maintain and will thus help make the settlement and clearing process self-financing if not profitable. The system, he said, is estimated to cost about $800,000 roughly P41.6 million.

PSE governors Robert Coyiuto Jr., Eddie Gobing, Harry Liu, Federico Lim, and Edwin Luy are protesting the board’s decision to purchase a new system.

Leung, however, said this is the best time to install a new system since the bourse should be well prepared to take advantage of opportunities when the market picks up. – Zinnia dela Peña