PSE to meet 20% brokers’ equity limit by Q1 2004

The Philippine Stock Exchange (PSE) expects to meet the 20 percent single industry share ownership limit under the Securities Regulation Code within the first quarter of next year.

ATR Kim Eng Capital Partners Inc. executive director Roberto Benares said they expect the brokers’ shareholdings in the PSE go down to about 10 to 20 percent by the first quarter of 2004. ATR Kim Eng was appointed as financial advisor for the PSE’s planned listing of its shares next month.

Benares said the divestments will be made through a series of transactions. "We’re talking of a private placement of either primary or secondary shares," he said.

While the PSE was converted into a stock corporation, a full 100 percent of its shares are still held by brokers. The exchange, looking at a Dec. 15 listing date, would then open up to the public.

To make its shares more attractive to investors, the Philippine PSE has explored talks with a group of foreign investors.

Negotiations with these investors, which include a foreign stock exchange, are now ongoing and that one group has already signified its interest to invest in the exchange.

The PSE earlier said it was considering tapping the stock exchanges in London and New York as possible strategic investors.

Upon demutualization through the conversion of PSE into stock corporation on Aug. 8, 2001, all 184 registered brokers became trading participants with each acquiring 50,000 shares in 2002.

The first sale of trading right and shares was in 2001 for P25 million, followed by another a year later for P12.05 million. These, however, were made between brokers.

Several brokers have already signified their intention to unload their shareholdings once the PSE lists its shares. The PSE was given until the end of the year to list its shares on the exchange.

Under the SRC, "once the exchange is organized as a stock corporation, no industry or business group may beneficially own or control more than 20 percent of the voting rights of the exchange."

The 20 percent ownership cap was brought about by the need to maintain fair play and to avoid conflicts of interest in the management of the exchange.

The Securities and Exchange Commission (SEC )has been urging the PSE to comply with the 20 percent ownership limit rule, threatened to impose a P1-million fine on the PSE should it fail to list by end-December this year.

In the meantime, the PSE is focusing its efforts on further professionalizing its operations and enhancing its revenue sources.

The exchange has also lined up new products to give investors more choices on where to invest their money. Following the launching of the dollar-denominated trading board, the PSE will soon allow the listing of Treasury bills.