Newly-elected PSE chairperson Alicia Arroyo told reporters that the exchange would be ready to list and trade its shares at the stock market by August this year – a full year behind the mandated schedule set under the Securities Regulation Code (src) – as they have been vigorously working to meet all the requirements with the Securities and Exchange Commission.
Earlier, the SEC had threatened to take control of the PSE board by appointing the non-broker majority to expedite the opening of the exchange’s ownership to the public should the PSE still fail to list and that its members will not be able to divest their holdings down to a combined block of only 20 percent.
Arroyo said they have been closely coordinating with the SEC, which has seen the sincerity of their efforts in completing the demutualization and transformation of the exchange into an attractive company primed for public offering.
When the PSE was demutualized – or converted from a non-stock, exclusive corporation to a stock corporation – in August 2001, it was given a year to conduct an initial public offering (IPO) and list its shares at its own floor. The PSE, however, has begged off from the listing requirement temporarily citing the weak market conditions and the extensive preparations in building and maximizing the exchange’s value by strengthening its core units such as the information technology (IT) and clearing and settlement groups.
Arroyo said the exchange could initially list its shares by the process of introduction, where no IPO or prior marketing would be needed, as they negotiate with strategic investors such as the International Finance Corp. and the Asian Development Bank for possible private placements of the available shares.
"We’re ready to list and divest but the question is when are we going to do that? We first want to look at all means to enhance the exchange’s earnings and shareholder value," Arroyo said.
She stressed that the PSE’s bread-and-butter – revenues from listings – would be enhanced and diversified to include tapping more listable companies, among them export-oriented firms, Board of Investments and PEZA (Philippine Economic Zone Authority) registered companies, top family-owned corporations, profitable SMES, oil companies, and IT firms such as those with contracts and deals with the PSE.
Based on the options being deliberated, the PSE may choose to list through three ways: (1) listing the parent company (PSE) itself and subsidiaries Securities Clearing Corp. of the Philippines (SCCP), the Philippine Central Depository (PCD) and exchange properties; (2) listing a new company that has been de-merged from the PSE (which would exclude the SCCP); and (3) listing the PSE and the SCCP, which the exchange plans to fully own and control.
Last year, the PSE approved a share swap with three of its partner banks in the SCCP to gain full control of the latter’s operations and result in lower costs and greater efficiency for brokers.
To do this, the exchange would seek the approval of the three banks – Equitable PCI, RCBC and Citibank – to swap their 49 percent stake in SCCP for the same value of PSE’s shares in the PCD, the lodging house for stock sale transactions.
The PSE owns majority or 51 percent of SCCP while in PCD, it holds a third or 33 percent. The three banks have a combined 49-percent in SCCP while owning another one-third of PCD. The remaining 33 percent in PCD is held by the Bankers Association of the Philippines (BAP).
By completely owning SCCP, the PSE would also completely own the new computer system that would finally address their daily concerns about costs and efficiency in SCCP.