The Philippine Stock Exchange (PSE) is preparing to renegotiate its planned buyout of its fellow shareholders in Philippine Dealing System Holdings Corporation (PDS Group) after securing the approval of the Securities and Exchange Commission late last year.
In an interview, PSE President and CEO Ramon S. Monzon said they are just waiting for the Bankers’ Association of the Philippines to get the authority from the 25 bank-shareholders to represent them in the negotiations.
“There are many shareholders of PDS. But most of them are banks. But I am not talking to all 25 because they have assigned a power of attorney to BAP. I am only talking to BAP for all the banks. And then there are a few more shareholders: SGX, Whistler Technology, Tata Consulting, San Miguel Corporation, FINEX, SSS,” he said.
However, Monzon said “We have not started the negotiations now because the power of attorney issued by the banks to the BAP have expired. So the BAP now is renewing that with the banks. Until that happens, I don’t want to talk to 25 different sectors. So we’re waiting for that.”
He said the PSE hopes to close the transaction this year and has already allocated some funds for it although the bourse may also have to take out a loan “depending on what the final price is.”
Monzon noted that, in the PSE’s previous negotiation with the PDS shareholders, they have already signed the deal but they were not able to get the regulatory approval.
“So this year, we reversed the process and got the regulatory approval first before starting negotiations with the shareholders because I don’t want to waste their time again or our time,” he explained.
Last December, the SEC finally exempted the PSE from the 20 percent cap of ownership so it can acquire full ownership of the PDS Group.
In a statement, the SEC said it has approved the application of the PSE for exemptive relief in its acquisition of additional shares in PDS.
The Commission En Banc has allowed the PSE to exceed the mandatory limit of 20 percent on ownership and voting rights in an exchange by an individual or an industry, granting it leeway to own up to 100 percent of the PDS Group, subject to certain conditions.
The Commission En Banc also approved the transfer of the shares of stock of an exchange controller, in order to allow the PSE to acquire PDS shares currently held by other PDS shareholders.
Currently, the PSE owns 20.98 percent of the issued and outstanding capital stock of the PDS Group. The stock exchange intends to acquire up to 100 percent of the operator of the country’s sole fixed-income exchange.
Under Section 33.2(c) of Republic Act No. 8799, or The Securities Regulation Code (SRC), no person may beneficially own or control, directly or indirectly, more than five percent 5 percent of the voting rights of the exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the exchange.
The SEC, however, may adopt rules, regulations or issue an order, upon application, exempting an applicant from the ownership limit if such ownership or control will not negatively impact on the exchange’s ability to effectively operate in the public interest.
Meanwhile, Section 33.2(c).3 of the SRC provides that no shares of stock of an exchange or exchange controller may be transferred without prior approval from the SEC.
The PDS Group includes the Philippine Dealing & Exchange Corp. (PDEx). Incorporated in 2003, PDEx operates the organized secondary market for the trading of fixed-income securities issued by corporations, as well as the government.
PDEx also calculates the Philippine Dealing System Treasury Reference Rates, which form the basis for valuing and marking-to-market interest rate-sensitive instruments.