The Philippine Stock Exchange is planning to launch Global Philippine Depositary Receipts (GPDRs) as a means to allow Philippine investors to trade in stocks listed in overseas bourses.
Prior to the launch, the PSE has issued a memorandum seeking public comments on its Proposed Rules for Global Philippine Depositary Receipts which will govern its listing, trading, and clearing and settlement.
“The Exchange intends to launch GPDRs, which are instruments where the holder has an economic interest in an underlying security listed on an overseas exchange,” the PSE.
It explained that, “While the GPDR holder does not possess voting rights in the underlying security, it has the option to convert the GPDR to the equivalent shares or units of the underlying security, subject to the requirements and procedures that will be determined by the GPDR Issuer.
Securities listed in the PSE may also be the subject of depositary receipts issued and traded in an overseas exchange in accordance with the rules and regulations of such overseas exchange.
The listing and trading of GPDRs are intended to provide local investors investment opportunities outside the Philippine market and allow them to build a globally diversified portfolio through GPDRs.
Investors can buy and sell GPDRs quoted in Philippine pesos through any PSE Trading Participant during trading hours of the Exchange.
Material information, including corporate actions, on the underlying security of a GPDR will be published on the PSE EDGE website.
Under the PSE’s draft rules, a GPDR shall be freely tradeable in the PSE on a sponsored or unsponsored basis.
For sponsored GPDRs, a foreign company which issued securities in an overseas exchange (the Underlying Company or Sponsor) enters into an agreement with a Philippine-based GPDR Issuer to sell GPDRs representing such securities in the PSE.
For unsponsored GPDRs, GPDRs are issued by a Philippine-based GPDR Issuer which acts as an intermediary but does not have a formal agreement with the underlying company in the overseas market.
Each GPDR, whether sponsored or unsponsored, represents a security listed on an overseas exchange and deposited with a Custodian appointed by the GPDR Issuer in the relevant home market.
The underlying securities are registered in the name of the Custodian and held on behalf of the GPDR Issuer who, in turn, holds the beneficial interest in the underlying securities.
Eligible to be GPDR Issuers include Trading Participants of the PSE, banks authorized by the Bangko Sentral ng Pilipinas to issue GPDRs, non-bank financial institutions authorized by the BSP to issue GPDRs, and investment companies under the Investment Company Act.
Any of these firms may be issuers by itself or through a corporate vehicle authorized solely to issue GPDRs, provided they have a three-year operating history in their respective lines of businesses at the time of their application as a GPDR Issuer.
Any of these firms may set up a majority-owned corporate vehicle authorized solely to issue GPDRs and such corporation may invoke the operating history of its majority shareholder.
Any planned change in control of the GPDR issuer within a period of three years from the listing of the first class of GPDRs must be submitted for the approval of the PSE at least 60 days prior to its intended effectivity date.
Applicants must have a minimum paid-up capital and stockholders’ equity of at least P100 million while GPDRs must have at least 50 holders upon application for listing and a minimum subscription of P30 million at the time of listing.