THE Securities and Exchange (SEC) has extended the Philippine Stock Exchange’s (PSE) deadline to respond to the regulator’s concerns about the planned merger with the Philippine Dealing Systems Holdings Corp. (PDS).
The SEC granted PSE’s request on December 14 to extend the deadline to answer the questions raised by the regulator regarding the dynamics of the PSE-PDS merger, SEC spokesperson Armand Pan said.
“SEC granted PSE’s request for an additional period of 45 days or until January 26 to submit comprehensive and complete response to fully address the concerns raised earlier by SEC,” Pan said in a text message.
The SEC wrote on November 27 a letter indicating all their concerns about the merger. The PSE was given 15 days from November 27 to respond to all the questions.
Vicente Graciano P. Felizmenio, SEC director for Markets and Securities Regulation Department, said on Friday that the PSE requested for an extension on December 11, of which the commission granted on December 14.
“We just want to know what will happen after the merger,” Felizmenio said.
“After [PSE’s response], we will have 60 days to act, depending on what they’ve written,” he added.
Pan said the SEC is concerned by the size of the transaction and the fact that two exchanges will be held by a single entity.
“The SEC is very cautious in dealing with the PSE’s plan to acquire PDS Group considering the size of movements in capital is more significant in the fixed income market,” Pan said.
“In 2014, turnover in PDEX [Philippine Dealing Exchange Corp.] which operates the bond market totaled to P4.4 trillion, more than double the amount traded in the stock market of only P2.1 trillion,” he added.
PDS is the parent firm of Philippine Dealing and Exchange system or PDEX, which operates as the trading floor of fixed income securities such as corporate notes or bonds.
The PSE is keen on owning more shares in PDS than its 20 percent shareholdings at present.
According to present corporate laws, a single entity is only allowed to hold up to 20 percent of an exchange. This would entail an exemptive relief from the SEC for the PSE to own more of PDS.
The stock exchange earlier said merger with the PDS Group it is in line with its vision to make capital markets trading “competitive” in the Philippines, along with its Asean neighbors which already merged their stocks and bonds trading.
PSE owned 20 percent of the PDS while the other stakeholders were Bankers Association of the Philippines (28.9 percent), Singapore Exchange Limited (20 percent) and other minority shareholders (31.1 percent).