First Metro may increase capital for overwhelming ETF demand


First Metro Investments Corp. (FMIC) may seek regulatory approval anew to increase its authorized capital stock for its Exchange Traded Funds (ETF), as many institutions see overflowing demand for the financial instrument.

During the Philippine ETF Investment Convention, FMIC President Roberto Juanchito Dispo said that the company “fears” that its current P3-billion capital stock for ETFs may not be enough, because of increasing demand on a daily basis.

“For this year, the P3 billion can be used already and there may be a need for us next week to already start the capitalization increase process,” he said.

Dispo further said that as of now, there have been a lot of inquiries for global funds to get into ETFs.

“We’re talking about global liquidity that can come here. Three billion pesos is our authorized capital. In the launch, we’re looking at initially using P1 billion to P2 billion of approved capitalization and we will use the P1 billion as cushion. If demand is very strong, we will have a P1-billion elbow room,” Dispo explained.

“Once the P3 billion is used up, we need to run to the SEC [Securities and Exchange Commission] for increased capital,” he added.

Meanwhile, Hans Sicat, Philippine Stock Exchange president and chief executive officer, who was also present in the convention held Tuesday in Makati City, said that the first ETFs may still be traded in September.

“It will be most likely be in September, because there are some players in the market that thinks August is a ghost month,” Sicat said.

An ETF is an investment fund that is similar to a mutual fund that tracks a basket of assets but is traded on a stock exchange similar to equities. But unlike mutual funds, the price of an ETF is quoted real time, so investors immediately know how much they are buying or selling their ETF shares for.


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