Philippine Stock Exchange to separate business, regulatory functions

MANILA, Philippines - The Philippine Stock Exchange (PSE) is close to approving a plan that would segragate the regulatory and business functions of the exchange.

The separation would involve spinning off the Market Regulation Division (MRD) and eventually the Issuer Regulatory Division (IRD).“We have been discussing that. We are in the final stages of passing it but the board still has to approve it,” said PSE chairman Hans Sicat.

The MRD is in charge of broker regulation while the IRD is in charge of the regulation of listed companies.

Former PSE president Francis Lim was earlier pushing for the segregation of the regulatory and business functions of the exchange, saying such a move would prevent conflicts of interest inherent between a stock exchange and a listed company. 

He said the move will not only strengthen the governance and credibility of the exchange as a regulator but wil also enable the PSE to devote more time to business development activities as a for-profit entity.

Also, Sicat said the exchange continues to review its rules on listing by way of introduction to provide more safeguards to the investing public and provide a transparent and level playing field. “I think probably the biggest question had to do with what  the latitude for valuation is… If you’re doing an IPO, we would require that the financial advisor do a basic analysis of cash flow. There was no guidance. Companies can set their price because they know their business but  under what framework?” Sicat said.

Aside from this, Sicat said a proposal to extend trading hours could still be feasible once the exchange’s new trading terminal is operational. He said plans to move the PSE’s corporate headquarters to Bonifacio Global City, is still in the pipeline and that the buildings committee should be able to decide on the two options presented by Ayala Land Inc.

The PSE had initially entered into a joint venture with ALI for the development of a 5,000-square meter area along 28th street and 5th avenue in Bonifacio Global City but construction was delayed due to market conditions.

The proposed project was supposed to be developed in two phases with the first one involving the construction of the PSE’s 15-story headquarters on a 2,000-square meter lot.