Shareholders OK conversion of PCDI into a holding firm

The Philippine Central Depository Inc. (PCDI) will be spun off into three subsidiaries to handle depository, trading, and clearing and settlement separately to be more efficient and faster in processing transactions.

PSE president Ernest Leung said PCDI shareholders approved last Monday the conversion of PCDI into a holding company. The new holding firm will will have an authorized capital of P500 million.

Leung said the PSE has approved the conversion of its 32 percent stake in PCDI to 12 percent of the new holding company.

One of the three subsidiaries to be formed will provide and perform the needed depository services for debt securities, including the generation of the list of beneficial owners together with interest and maturity payment dates and the delivery of fund transfer instruction to the settlement bank.

It will not only operate as a depository for equities but for debt securities as well.

Another will handle the operations of the planned fixed income exchange, a brainchild of the Bankers Association of the PHIlippines while the other will handle clearing and settlement operations.

The fixed-income exchange is designed to provide a platform for the secondary trading of fixed-income securities such as government securities, commercial papers and asset-backed securities issued by companies. It will be the country’s first official electronic market for public and private debt instruments.

Apart from the PSE, other shareholders of the PCDI include the Financial Executives of the Philippines, Investment Houses Association of the Philippines, the Social Security System and the Development Bank of the Philippines.

Leung said the PSE is studying whether it should raise its investment in the fixed-income exchange to 20 percent, the maximum limit any entity or group may invest in an exchange.

"We’re evaluating whether it would be a good move on the part of the PSE to increase its stake from 12 percent to 20 percent," Leung said.

Leung said the exchange needs P40 million to beef up its investment in the exchange. „ It‚s really up to the board to decide," he said.

The BAP last year signed an agreement with the US Agency for International Development for the establishment of the fixed-income exchange. – Zinnia Dela Peña