Merger of PSE, PDS pushed back to November

MANILA, Philippines - The merger of the country’s stock and bond markets, a development seen to enhance liquidity in the financial market, has been pushed back to a latter date.

In a disclosure, the Philippine Stock Exchange (PSE) said it extended its memorandum of agreement with members of the Bankers Association of the Philippines (BAP) and Singapore Exchange (SGX).

“The parties agreed to amend the memorandum of agreement to extend the terms thereof to Nov. 30, 2013,” PSE said, adding that the initial deal will expire on Aug. 18.

In May, PSE signed the deal with the two entities, major shareholders of the Philippine Dealing Systems Holdings Corp. (PDS).

“The memorandum of agreement originally set out the preparatory steps to be undertaken by the parties in pursuance of the proposed acquisition by the PSE of the shareholdings of SGX and BAP in PDS,” the local bourse said.

“We have been working closely with BAP and SGX since we signed the original agreement. I am optimistic that the extension gives us enough time to close the discussions,” said PSE president and CEO Hans B. Sicat.

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.

PSE earlier said the consolidation of the equity and bond markets will deepen the financial market in the Philippines. In other countries, both fixed income and equity securities trading are operated under one group or entity.

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

PSE earlier announced the reorganization of its market regulations structure by creating a new independent Capital Market Surveillance Group.

This is in anticipation of more products in the PSE including the possible offering of fixed income instruments, PSE said.

The local stock market, which has 254 listed firms, is enjoying positive investor sentiment given robust corporate and macroeconomic fundamentals and investment grade scores from Fitch Ratings and Standard & Poor’s.