PSE hopeful on PDS merger
Iris Gonzales (The Philippine Star) - May 9, 2017 - 12:00am

MANILA, Philippines - The Philippine Stock Exchange (PSE) hopes to secure regulatory approvals for its plan to merge the local bourse with the capital market infrastructure of the PDS Group, its newly elected top official said on Saturday.

The PSE also needs to get the approval of the Philippine Competition Commission (PCC), which covers transactions worth at least P1 billion. The PSE’s transaction is estimated at roughly P2 billion to be funded from loan and internal funds.

“The biggest challenge facing us now is getting the regulatory approval for our purchase of PDS and when that is accomplished, even more difficult task is how to integrate the operations of PDS into the PSE umbrella,” said PSE president Ramon Monzon.

The PSE is working to buy out the shares held by the Bankers Association of the Philippines and other sellers in the Philippine Dealing System Holding Corp., the operator of the Philippine Dealing System (PDS), the fixed income exchange.

It is now working with the Securities and Exchange Commission (SEC), the corporate regulator, for exemptive relief from the 20 percent limit on ownership of what would supposedly be a unified exchange. 

The exemptive relief is a condition for the merger because under the Securities Regulation Code, no single industry or business group should own more than 20 percent of an exchange. Thus, the PSE asked for an exemptive relief from the SEC.

“We need to get exemptive relief from the SEC. They’ve laid down certain requirements we must comply with. We are in the process of complying with those requirements,” Monzon said.

He said the PCC also wants to review the transaction to see if there is any problem with this combination.

“We are hopeful we would be able to comply with all the requirements in good time,” Monzon said when asked if the deal could be finalized within the year.

The PSE board has obtained the nod from stockholders during the company’s annual stockholders meeting on Saturday to undertake certain steps to comply with the SEC requirements.

Monzon said one requirement is to bring down the ownership of the brokers in the exchange to 20 percent from 27.9 percent.

The PSE operates the local bourse, while the PDS Group operates the PDex, the country’s fixed-income platform. The two exchanges are moving to consolidate to offer additional value to issuers, investors, and other market participants at various levels.

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