The Philippine Stock Exchange Inc. (PSE) still has the opportunity to buy out bond exchange operator Philippine Dealing Systems Holdings Corp. (PDS) amid issues raised by the Securities and Exchange Commission (SEC).
In an email to The Manila Times, PSE President Hans B. Sicat said the exchange was “currently evaluating” questions raised by the SEC regarding its planned P2.25-billion acquisition of the PDS.
“We received a letter on November 27, 2015 from the Securities and Exchange Commission requesting for more information and clarification on our proposed acquisition of more shares of PDS,” Sicat said.
“We are currently evaluating the items raised by the commission to determine how best to address these in addition to the earlier submissions we have made to the SEC on this matter,” he added.
Instead of an approval of the bourse’s petition for “exemptive relief,” the PSE received a letter from the SEC enumerating the issues to be cleared regarding the PDS transaction.
November 27 was the supposed deadline of the deal with the Bankers Association of the Philippines (BAP) for a 28.91-percent stake in PDS.
PSE officials opted not to comment on deal at this point.
According to the SEC, the issues indicated in the letter included the possible changes in trading settlement fees and how the trading system of the merger will turn out.
The SEC gave the PSE 15 days to reply, and will decide on whether or not the exemptive relief will be granted. The SEC said its decision will be made within 60 days. This the PDS deal can possibly happen next year.
If approved, the exemptive relief will give the PSE the go ahead to own more than 20 percent of PDS. The corporate rule on the matter restricts a single entity to own a maximum of 20 percent of an exchange.
SEC earlier noted that the merger between stock and bond trading should be given a careful evaluation in view of the new law on competition.
“It’s actually the issue of competition. We have a new competition law. We’re mindful [of]the unification of two exchanges, and they’re practically companies that might result in some dominance by a single entity,” SEC Chairperson Teresita J. Herbosa earlier said.
So far, the PSE has four share purchase agreements in place with PDS shareholders: the acquisition of a 28.91 percent PDS stake from the BAP for P650.55 million, 3 percent from Finex Research and Development Foundation Inc. (FINEX) for P69.39 million, 8 percent from Whistler Technologies Services Inc. for P147.204 million, and 0.06 percent from Insular Investment Corp. (IIC) for P1.186 million.
PDS is the parent firm of the Philippine Dealing and Exchange Corporation (PDEx), which operates as the trading floor of fixed income securities such as corporate debt notes or bonds.
Before the merger and acquisition plans, PSE owned 20 percent of the PDS. The other stakeholders were BAP (28.9 percent), Singapore Exchange Limited (20 percent) and other minority shareholders (31.1 percent).
The PSE earlier said it is looking at transforming the PDS system into a “true auction market.”