The Philippine Stock Exchange (PSE) is looking at transforming the Philippine Dealing System (PDS) into a “true auction type market” for corporate bond trading.
Last week, the PSE was bidding for a P2.25-billion buyout of the PDS, a development that could mean the merger of the corporate equities and bond markets. But instead of pushing for a takeover and merger, PSE President Hans Sicat said the local bourse will settle for a two-thirds stake in PDS, for about P1.8 billion, which will allow consolidation with PDS as PSE’s subsidiary.
“I think the real general reform [in the consolidation], is that the corporate bond market will transform to a true auction type market. Because clearly, there is a need for everyone in the system to start participating,” PSE President Hans Sicat said in a briefing on Friday.
“But that is obviously our dream. If we are able to operate it and be allowed to operate the fixed-income exchange without any burden, then that will be the positive thing of putting it into an equities type auction exchange,” he added.
The PDS is the holding firm of corporate fixed-income securities trading platforms Philippine Dealing and Exchange Corp. (PDEX), Philippine Depository and Trust Corp. and Philippine Securities Settlement Corp.
The PDS is owned by the PSE (20 percent), the Singaporean Exchange Limited (20 percent), the Bankers Association of the Philippines (25 percent) and the investing public (35 percent).
The PDS stake acquisition is one of PSE’s efforts this year together with expanded capital funds raising. Sicat said the PSE is on track to achieve its 10-percent growth target in profits this year.
The bourse’s first half net income increased 34 percent to P570.26 million from P425.55 million a year ago. Revenues were likewise up by 27.6 percent to P909.49 million due to the 109.1-percent advance in listing-related profits, amounting to P575.77 million.
“We just maintained what we told at the start of the year, it will be 10 percent up [in profits]from last year. I think if things are going our way, barring any major economic issues, we should be able to make that number,” Sicat said.
He said the bourse is now “roughly [at]half” of the P200 billion fund-raising targets, while companies that listed already reached four, excluding firms in listing discussions, from the targeted nine to 10 companies to list this year.
“We are looking forward to more capital-raising activities this year as market conditions remain ideal for that purpose. We are also optimistic that trading activity will pick up in the remaining months so we can see average daily turnover closer to the previous year’s level,” he added.
The four companies that debuted in the stock market this year include Top Frontier Investment Holdings Inc. and Trans-Asia Petroleum Corp. by way of introduction, as well as Double Dragon Properties Corp. and Century Pacific Food Inc. by initial public offering.