PSE reviving ETF market

MANILA, Philippines — The Philippine Stock Exchange Inc. (PSE) is introducing additional regulatory reforms through its proposed rule amendments for exchange traded funds (ETFs).

“We are working on reviving our ETF market and we hope these rule changes will provide the impetus for asset managers to structure and list ETFs,” PSE president and CEO Ramon Monzon said.

In the proposed revised rules, collective investment schemes, including umbrella funds and unit investment trust funds may now list their multiple sub-funds under one ETF issuer.

The listing of different types of securities, such as fund units, in addition to shares of an ETF company, will also be accepted by the exchange.

The PSE said actively managed ETFs would likewise be allowed to list.

Another salient revision being made by the exchange is the reduction of the capitalization requirement for issuers from P250 million to P50 million, with an option to reduce to as low as P1 million for investment companies with at least five-year track record.

The revised rules likewise allow ETF issuers to appoint only one authorized participant to handle the creation and redemption of ETF shares or units.

The market maker for ETF also need not be an authorized participant under the proposed amendments.

In addition, the amendments cover clearer rules on allowing ETFs with underlying indices that track foreign exchange-listed securities.

Also being developed by the PSE are new rules on negotiated trade reporting facility, which is a facility for brokers to execute their trades that is similar to negotiable trading facilities in other exchanges.

According to the PSE, the facility aims to boost liquidity with the efficient flow of funds in the market.

The PSE said both the ETF and negotiated trade reporting facility rules would be released to the public for consultation purposes.

Meanwhile, PSE and its wholly-owned subsidiary Philippine Depository and Trust Corp. (PDTC) are collaborating with multiple stakeholders to amend the PSE SBL rules to allow the execution of directed pooled lending through PDTC’s SBL facility.