THE Securities and Exchange Commission (SEC) will thoroughly review whether to allow the Philippine Stock Exchange Inc. to acquire the firm that operates the Philippine Dealing and Exchange Corp. (Pdex), ultimately resulting in the merger of the two trading platforms for equities and bonds.
SEC Chairwoman Teresita Herbosa said that the PSE has already submitted voluminous documents, including the proposed business plan, which is expected to answer all the queries made by the regulator regarding the intended merger.
“We have until March to decide on that. The latest PSE submission is currently being reviewed by SEC technical and legal staff,” Herbosa said.
PSE will be the surviving entity from the merger.
Since 2014, the PSE has been working on a P2.25-billion majority acquisition of PDS Holdings Inc., which owns Pdex, the trading platform for the country’s bond market.
However, the PSE failed to secure the regulator’s approval last year after it could not answer several questions on how it would run the merged entity.
The questions included what system will the merged platform use since the PSE and Pdex are using different schemes , ranging from the trading platform model to delivery-versus-payment schemes, settlement and clearing systems, and type of depository.
The SEC then asked about the reliability of both exchanges, highlighting the PSE’s three trading halts in August, or weeks after it shifted to its new trading platform.
“SEC is carefully studying PSE’s proposed acquisition of Pdex considering that the size of movements in capital is very significant in the fixed-income market,” the agency said in a statement.
Last year, value turnover on Pdex reached P3.42 trillion, while it was P4.3 trillion for the PSE.
Earlier, PSE president Hans Sicat has said they were able to deal with all the 10 counterparties that are involved in the deal, including the minority and majority shareholders of PDS.
“All the documents have been prepared but I cannot exchange shares for money without an approval from the SEC. That is the only thing left. The whole deal is complete. Everything. But without that go-ahead, there’s really no deal,” Sicat earlier said.
The 10 counterparties include four shareholders that own a big chunk of PDS, namely the Bankers Association of the Philippines, Finex Research and Development Foundation Inc., Whistler Technology Services Inc. and Insular Investment Corp.
These four shareholders have a total combined ownership in PDS of 40.06 percent while the PSE’s stake is at 20.98 percent.