PSE draws up rules on listing of exchange- traded funds

The Philippine Stock Exchange (PSE) has drawn up the rules governing the listing of exchange-traded funds (ETFs).

An ETF is an open-end fund that tracks indexes or a basket of securities that are listed and traded in the stock exchange.

Under the proposed rules, an ETF intending to list on the stock market needs a minimum asset base of P250 million for local entities and $10 million for foreign funds.

Applicants will be charged a processing fee of P50,000 and listing fee of P250,000 or one-tenth of one percent of total authorized capital stock of the ETF, whichever is higher, but with a maximum amount of P1 million.

An ETF must be established in accordance with the Investment Company Act of the Philippines and duly registered under the Securities and Exchange Commission. It must be managed by a reputable investment manager which has an established track record in managing investments.

Once its registration statement has been approved by securities regulators, the ETF is required to sell shares through an initial public offering and must comply with the full disclosure rules.

The proposed rules will be submitted to the SEC for approval, the PSE said.

The PSE is banking on ETFs to spur the growth of the equities market and attract more investors. ETFs have been enjoying spectacular rates of growth over past years but are still dwarfed by their mutual fund counterparts.

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