SEC seeks PSE action plan on 20% ownership limit

The Securities and Exchange Commission (SEC) has directed the Philippine Stock Exchange (PSE) to come up with an action plan on how the latter intends to reduce brokers’ shareholdings in the exchange to the required 20-percent limit.

The PSE was given until the end of this month to submit its plan for SEC’s approval.

Under the Securities Regulation Code, no single industry should own more than 20 percent of the exchange’s total outstanding capital stock.

At present, brokers hold 35.33 percent of the PSE. This means that the exchange would need to sell 15.33 percent to outside investors to comply with the 20-percent single industry ownership limit.

Individual investors, on the other hand, are limited to a maximum of five-percent stake each in the PSE.

The PSE is now scouting for a financial adviser to help it determine the best option to comply with the 20-percent industry ownership limitation requirement.

The exchange expects to pick a financial adviser by the end of this month or January next year.

Among the options being considered to comply with the ownership limitation requirement include going public, finding a strategic partner, implementing an employee stock option plan, or a combination of all three options. The industry limitation requirement was brought about by the need to reduce brokers’ control in the bourse and to allay fears that the exchange is an "old boys’ club."