The Philippines Stock Exchange Inc. said that it is now exploring its options after the Securities and Exchange Commission denied its application to acquire the PDS Holdings Inc., the operator of the country’s fixed-income market, adding that the manner by which the agency ruled against them was malicious.
Hans Sicat, president and chief executive officer of the PSE told reporters on Wednesday that although it is better to know that the SEC had finally decided on the matter instead of keeping the equity operator in limbo, the way the ruling was communicated to them was made in bad faith.
“First of all it is good that there is a decision now from the SEC on the PDS acquisition. I think it is fair to say it’s better to know what the answer is as opposed to waiting for quite sometime. We thank the SEC for taking that step,” Sicat said.
“I would say, however, it was a bit surprising the manner in which they have done it …it appears they have a new modus operandi wherein they mentioned everything to the press and gave us the official answer by fax three hours later [the press briefing],” he added.
Further, he said that although several reporters were seeking the PSE’s comment on the rejection Tuesday, the PSE could not respond immediately, saying, “I said it’s hard to react when you don’t know what the issues are. Their [SEC] discussion with you, I just feel that as a major partner and issuer in the capital debt market that’s not the correct process.”
On the PSE’s part, he said that there is some misinformation that needs to be clarified. One issue is that contrary to the .001 percent decrease in depository fees as shown in the SEC’s power point presentation, the PSE has committed to reduce the fee by 10 percent then to 25 percent by two years after acquiring the PDS.
“It is farthest from the truth that we don’t care about the fixed income exchange nor we don’t know anything about it. So that is a very unfair characterization of the PSE,” he said.
He added that when the PSE first made known to the SEC its intention to acquire the PDS, the PSE said that it would keep the management of the PDS since these people are highly capable professionals.
“That representation on our part should give the [SEC] the idea that we do respect the running of PDS and also the professionals over there,” the PSE’s top executive said.
Sicat said that the PSE board is now in the process of evaluating their options, which include, among others, to move for reconsideration of the SEC’s denial of its application for exemptive relief, or possibly to just accept the status quo and live with the dual structure for the equity and bond markets.
But he stressed that the PSE and its stakeholders continue to believe that capital market integration is necessary to keep up with global market trends.
“While SWC may have a conclusion that capital market integration is not necessary or not the model, the industry would like to disagree. We see the global trend. I’m not sure that is the policy being espoused,” Sicat said.
SEC Chairperson Teresita Herbosa on Tuesday, said that the en banc’s ruling that denied the PSE’s application for exemptive relief was mainly anchored on public interest as the representations made by the PSE before the agency showed lack of knowledge about how the bond market operates.
“We are quite open if they [PSE] say we made a mistake. We welcome that. We are not going to insist on something wrong. We are confident that what we did what right. But our decision is without prejudice to the PSE’s option to move for reconsideration, provided they [PSE] could provide what we have been requiring them to do,” Herbosa said.