The Philippine Stock Exchange (PSE) has sealed partnerships with the Bankers Association of the Philippines (BAP) and Singapore Exchange (SGX) as it pushes for the unification of the stock market and the fixed-income exchange.
PSE, in its statement late on Monday, announced that it has signed a separate memorandum of agreement with the members of BAP and SGX to explore the consolidation of the PSE and the Philippine Dealing Systems Holdings Corp. (PDS).
PDS Holdings operates the fixed-income exchange and securities depository. Collectively, the BAP, through its member banks, and SGX, own approximately 45 percent of PDS Holdings, while the PSE owns 20 percent.
PSE Chairman Jose Pardo explained that the general structure in most markets is both fixed income, and equity securities trading are operated under one group or entity.
“This has not been the case in the Philippines owing to various reasons but moving forward, we now have this opportunity to review the optimal structure for our market so we can further deepen our capital markets and make it even more attractive to investors,” he said.
The agreements signed by PSE with BAP and SGX will provide the framework for discussions and development plan that may be pursued by the different parties involved, to consolidate the operations of the PSE and the PDS.
BAP President Lorenzo Tan said that there are possible synergies that could arise from this consolidation, which could eventually help bring down costs related to the fixed-income trading operations of banks and other financial institutions.
“We can leverage on the strengths of both exchanges to meet this objective,” he added.
Pardo further said that the PSE understands that the government and other market players have been watching developments on the possible consolidation of PSE and PDS.
“We shall be closely coordinating with all stakeholders and we hope we can get their support in any initiative that may result from this undertaking, to ensure that the overall goal of developing our capital markets is achieved,” he said.
Recently, PSE disclosed that in anticipation of more products being traded at the bourse, including the possible offering of fixed-income instruments, it is reorganizing its market regulations structure by creating a new independent Capital Market Surveillance Group within the exchange structure.
This new group, according to the bourse, will absorb the functions of the Capital Markets Integrity Corp. and prepare for surveillance of products beyond equity securities.