PSE tightens listing rules

MANILA, Philippines - The Philippine Stock Exchange (PSE) is further tightening its listing criteria and requirements in line with efforts to elevate standards to international best practices.

Under the amended rules, the PSE is raising the minimum public float for listed companies to 12 percent from the existing 10 percent. To enjoy continued listing, the listed firm must rank among the top 25 percent in terms of median daily value in nine out of the 12-month period in review from the current P5-million average daily value.

The ranking of qualified companies should also be based on full market capitalization instead of float market capitalization, the PSE said.

The PSE also noted that the ranking shall no longer consider the sector representation of companies and shall treat eligible companies equally. Currently, final selection of companies is done in two stages, with the two highest-ranked companies from each of the six sectors filling the first 12 slots to ensure sector representation. The remaining slots will then be occupied by the 18 highest-ranked companies from among the other qualifiers.

“The revision should enhance investor confidence and at the same time, challenge our listed companies to make their shares more attractive to investors,” PSE president and chief executive officer Hans B. Sicat said.

To be eligible for the sector indices, common stocks of the company must rank among the top 50 percent in terms of median daily trade per month in eight out of the 12-month period in review.

The index recomposition periods will also be moved to March and September yearly from the current May and November schedules.

Other notable changes to the index policy include the creation of a Reserve List to be used in the event that one or more constituents are deleted from the PSE index (PSEi); stricter rules for insertions and removals to provide stability in the index selection process; and additional provisions to better reflect the effectiveness of the PSEi as a market indicator.

The move to update its index management practices follows the PSE’s latest index review that will take effect on May 9, with Security Bank Corp., joining the PSEi in place of China Banking Corp.

The recomposition followed a regular review of the PSE’s main and sectoral indices for trading activity from January to December 2010.

“This recent review follows previously approved objective criteria. We are pleased to note that 62 companies have qualified for inclusion in the PSEi, higher than the 58 companies that qualified in the previous review. This reflects renewed investor confidence, mainly due to improvements in corporate governance among listed firms,” Sicat said.