Gov’t regulators urged to speed up SBL rules

The Philippine Stock Exchange (PSE) is urging government regulators to speed up the issuance of regulations on securities borrowing and lending (SBL)in the stock market.

PSE president and chief executive officer Francis Lim said the SBL facility will help boost efficiency and liquidity in the capital market.

"I request the support of our government agencies, particularly the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission and the Bureau of Internal Revenue, on the expeditious issuance of the necessary regulations on SBL," Lim said during a two-day workshop and roundtable discussion on SBL.

"An institutionalized SBL facility is what the market needs to strengthen its competitiveness in the region and our regulators play a pivotal role in its effective implementation," Lim added.

He noted that the PSE is the only exchange in the East Asian region that has yet to set its place an SBL facility.

Neighboring stock exchanges such as Hong Kong, Singapore, Thailand, Korea, Japan, Indonesia and Malaysia have all adopted SBL to prevent settlement failure of trades. "As a result, the liquidity of their respective markets have improved," Lim said.

SBL is a mechanism that allows the loan of securities by a lender to a borrower who needs the securities to support settlement obligations or trading strategies.

Lim, however, expressed confidence the SBL facility would be implemented within the year.

He noted that last year’s enactment of RA 9243 or the law rationalizing the documentary stamp tax (DST), has opened the doors towards the adoption of the SBL facility.

Lim explained that one key feature of the law is formalizing SBL activities in the stock market and exempting these from payment of DST.

Since 1998, the PSE has worked closely with the Department of Finance, SEC, and the BIR as well as both houses of Congress to lay the groundwork for the institutionalization of SBL activities in the stock market.

The workshop, hosted by the PSE in cooperation with Pan Asia Securities Lending Association Representatives (PASLA), was aimed at promoting meaningful discussions and exchange of information to help the PSE and market players come up with the most viable approach for the facility’s implementation.