PSE seeks control of merged stock, bond marts

MANILA, Philippines - The operator of the country’s only stock exchange expects to gain majority control of the new entity that will be formed after the local bourse is merged with the bond market, a top official said.

The consolidation of the stock and bond markets, a development seen to enhance liquidity in the financial market, will be conducted through a share swap.

“We signed a memorandum of agreement with the two because they were the two largest holders of the Philippine Dealing Systems Holdings Corp. (PDS) group,” said Philippine Stock Exchange (PSE) president and CEO Hans B. Sicat.

Sicat said PSE aims to secure a controlling portion, or two-thirds, of the merged entity.

Last week, PSE signed an agreement with members of the Bankers Association of the Philippines (BAP) and Singapore Exchange (SGX).

BAP, through its member banks, and SGX own around 45 percent of PDS, which operates the fixed income exchange and securities depository, while the PSE owns 20 percent.

The deal provides a framework for discussions and developing a plan for the merger.

“Basically, we would be acquiring those shares by giving our shares,” Sicat said.

During the PSE’s annual stockholders meeting, shareholders approved the increase in authorized capital stock to P120 million from P97 million.

The Bangko Sentral ng Pilipinas and the Department of Finance earlier said they are supporting the proposed unification of the country’s stock and bond markets that could enhance liquidity in the financial market.

The local stock market, which has 253 listed firms, is enjoying positive investor sentiment given the higher investment grade score by Fitch Ratings and Standard & Poor’s on the Philippines.