THE Securities and Exchange Commission (SEC) has approved a higher minimum public float of 20 percent, to be implemented initially for companies looking to list at the Philippine Stock Exchange (PSE).
“By increasing it … we expect more liquidity. More liquidity means that we are more attractive to investors and the institutional ones,” SEC Market Regulation Director Vicente Felizmenio Jr. said a news briefing on Tuesday.
Effective immediately, the rule will be expanded to covering existing listed firms via an order to be released sometime in the first quarter of next year.
The SEC had wanted to raise the minimum public float from 10 percent beginning July this year based on draft rules released in May.
Again, companies looking to go public would have to immediately comply while listed firms would be given up to the end of next year to raise their public floats to 15 percent. An end-2020 deadline was set for meeting the 20 percent rule.
In seeking to raise the public float, the SEC said it wanted to improve market depth and increase liquidity, which turn would improve market efficiency, reduce volatility and encourage better price discovery.
“For now it’s 20 [percent]… the feedback that we got is from the investors’ point of view — they most welcome that, especially for the institutional fund managers, because we are all aware that 10 percent limits the liquidity of the market,” Felizmenio said.
“The commission has yet to decide whether to increase it to 30 or 35 percent but definitely the 20 percent minimum threshold is most welcomed by the investors,” he added.