At the same time, the SEC called yesterday on all stockholders of the PSE to participate in the election scheduled by the PSE this Friday.
Disappointed over the way the nominations and election rules were implemented by the PSE Nomination and Election Committee (Nomelec), broker-candidates Filomeno Francisco of AB Capital Corp., Eddie Gobing of Lucky Securities, Edwin Luy of Triton Securities, Federico Lim of Belson Securities, Harry Liu of Summit Securities, Paulino Soo of Abacus Securities, Joseph Roxas of Eagle Equities, and Gregorio Chan of Tri-State Securities, withdrew from the elections.
SEC Markets Regulation Department director Jose P. Aquino said: "We would like to encourage the group of Francisco to reconsider their withdrawal and join the race. What else do they want? They have already proven that they have the support of the majority of the PSE stockholders."
The SEC issued yesterday a letter-appeal to warring PSE broker-members to immediately resolve their differences to ensure the smooth operations of the bourse.
In its two-page letter to stockbrokers, the SEC said the worsening situation at the PSE "will give a negative impression on the PSE and will not be an encouragement for foreign investors to come in. It must be emphasized that the PSE must get things in shape domestically as part of steering itself for a more global focus."
"We’re hoping that the member-brokers of the PSE will come to a reasonable and proper settlement of their differences for the good of the Philippine capital market. This is also to avoid the constitution of a management committee that will automatically take over the exchange if the PSE board elections scheduled this Friday remain unsuccessful," Aquino said.
"This should serve as a stern warning to them that if they don’t behave, we will be forced to create a management committee to act as the oversight body for the PSE. We hope that would pressure them to cooperate," Aquino said.
Aquino said most of the PSE member-brokers have expressed vehement objection to the SEC plan because they feel that this would be in violation of the PSE’s self-regulatory powers.
If appointed, the six-member management committee that will take over the exchange will be headed by SEC Chairman Lilia R. Bautista and will be composed of SEC Associate Commissioner Fe Eloisa Gloria, retired Supreme Court Justice Florentino Feliciano, Nestle chief executive officer Juan Santos, Mercedita Nolledo of the Ayala Group of Companies, and former PSE governor Francis Chua.
Aquino said the SEC would also assign some of its staff at the PSE’s Compliance and Surveillance Department to ensure that the market is free from any illegal trading activity while the exchange has yet to thresh out its problems.
He said the current impasse at the PSE is not healthy for the Philippine market and could even drive away prospective investors.
The worsening squabble among stockbrokers has forced the PSE to postpone the elections of a new board scheduled last Saturday due to lack of quorum.
The failure of elections was caused by a boycott staged by a group of brokers which led to the lack of a quorum during the bourse’s stockholders meeting last Saturday.
The dispute stemmed from the decision of the PSE Nomelec headed by Aquino to shortlist the nominees for the four independent non-broker positions to only four, leaving the PSE stockholders no other candidates to choose from and effectively allowing the four incumbent directors appointed to retain their positions.
The four incumbents that were appointed as independent directors were Ateneo de Manila University law dean Fr. Joaquin Bernas, PSE president Ernest Leung, and directors Tomas Apacible, former Customs Commissioner and Cayetano Paderanga, former socioeconomic planning secretary.