PDS seeks lifting of trading restrictions on listed bonds

MANILA, Philippines - The country’s trading platform for bonds and currencies said it aims to allow tax-exempt institutions to buy and sell corporate debt papers as early as first quarter next year.

Philippine Dealing System Holdings Corp. and Subsidiaries (PDS Group) president and CEO Cesar Crisol told reporters yesterday the company wants to lift trading restrictions on corporate bonds, following what was implemented for government debt papers earlier this year.

“It was always part of the program to integrate both the taxable and tax-exempt markets. It just happened the government securities moved ahead of the corporate (issuances),” Crisol said on the sidelines of the 2nd Asean Fixed Income Summit in Manila.

“We would like to do this probably by no later than the first quarter of 2016,” he added. The government earlier this year successfully implemented non-restricted trading and settlement for government securities after months of delay.

Before this landmark initiative, securities were only allowed to be exchanged between entities belonging to the same tax category or classification. In the case of government debt papers, they may now be traded and settled between taxable institutions.

A tax-tracking facility was earlier put in place to monitor the transfer of government bonds across tax categories and to calculate the final withholding tax due for every transaction.

Crisol said there would be no additional facility needed to allow the non-restricted trading of corporate bonds and that this scheme would follow the model used for government securities.

“We just have to discuss the integration of the market with the Bureau of Internal Revenue so we can recognize the system that would track trades in the market,” he continued.

The PDS Group has also been in discussions with the Securities and Exchange Commission regarding this move and Crisol said the regulator is amenable to the plan. Philippine Dealing and Exchange Corp. (PDEX), operated by the PDS Group, reported a record volume of P191.9 billion in listings last year. Latest data showed new listings reached P77.4 billion as of August this year and Crisol said he expects at least four more issuances before year-end.