Exchange-traded funds await SEC approval

MANILA, Philippines - The Securities and Exchange Commission (SEC) has yet to approve the rules that will govern the listing of exchange-traded funds (ETFs).

“Still under discussion,” SEC commissioner Ma. Juanita E. Cueto said in a text message when asked if corporate regulators have approved the guidelines.

The SEC was scheduled to meet on Feb. 6 to deliberate on the proposed listing rules for the new investment instrument.

An ETF is defined as a security that monitors the index, a commodity of assets like an index fund, but trades like a normal stock in an exchange.

Late last month, the Philippine Stock Exchange (PSE) submitted to the SEC its proposed rules that will govern the listing and trading of ETFs after it gathered public comments.

At least three firms, First Metro Investment Corp. of the Metrobank Group, Sy-led BDO Unibank Inc. and Bank of the Philippine Islands of the Ayala conglomerate have expressed plans to offer ETFs.

PSE president and CEO Hans B. Sicat earlier said ETFs will provide several advantages and investment options to investors including liquidity, especially for those who cannot directly access specific sectors in the market due to a country’s specific regulatory environment.

The creation of an ETF would allow investors more investment options aside from the existing stocks in the market.

The proposed ETF listing rules, which is governed by the general ETF guidelines issued by the SEC in October, provides for transparency and investor safeguards that adhere to the International Organization of Securities Commissions and best practices in other jurisdictions.

Prior to listing in the local bourse, minimum paid-up capital for ETFs should be P250 million.

ETFs will be exempt from the listing requirement that new offerings should allot 20 percent of the shares for trading participants and 10 percent mandatory allocation for local small investors.

The lock-up and track record requirements in the listing rules shall not apply to facilitate the listing of ETFs.