The Philippine Stock Exchange (PSE) will ease the rules on exchange-traded funds (ETFs) to encourage new issuances with the objective of raising P200 billion through the capital markets this year.
“Right now, we’ve already raised almost P52 billion,” PSE president and chief executive officer Hans Sicat said in a press briefing on Thursday night.
ETFs are like mutual funds except that they are listed and traded on the stock market like any stock. Ideal for investors who want to create a diversified portfolio of stocks at a lower investment cost, ETFs monitor a commodity of assets like an index fund and are considered as the world’s fastest growing asset class.
The country’s first ETF, Metrobank Group’s First Metro Investment Corp. (FMIC), was launched in December last year and tracks the performance of the Philippine Stock Exchange index (PSEi).
Sicat said that the bourse is planning to implement “major enhancements” in the trading rules for ETFs.
“The upgrade of these rules is made to effectively help new issuers in the ETF market,” Sicat said. He said the PSE decided to amend the rules after some potential players opted to delay their plan to join the newly introduced market for ETFs.
Roel Refran, PSE chief operating officer, said the bourse is holding discussions with the Securities and Exchange Commission on the amendments to the rules.
Among the changes that will be made are the removal of underwriters and the paid-up capital requirement for certain participants.
The PSE is also hoping to put in place a regulatory framework for futures trading this year, and eventually introduce stock futures in 2015.
Meanwhile, Sicat expressed confidence in the country’s ability to attract more foreign
“As investors look at fundamentals, of course short-term events are always driven by emotions rather than fundamental investment theory, but we seem to be doing well,” Sicat said.
“The view on the Philippines continues to be strong and that’s one thing that differentiates us among other Asean [Association of Southeast Asian Nations] countries. We’re getting good marks on the macroeconomic side and it becomes a question of which companies will decide to come in,” he added.
The PSE is anticipating four to five initial public offerings in the first half of 2014.