||Asean Affairs 23 May 2013
PSE signs agreements with BAP and SGX to explore consolidation of PSE and PD
The Philippine Stock Exchange, Inc. (PSE) has signed a Memorandum of Agreement with the members of the Bankers Association of the Philippines (BAP) and, another with Singapore Exchange (SGX) to work towards the consolidation of the PSE and Philippine Dealing Systems Holdings Corp. (PDS), which operates the fixed income exchange and securities depository. Collectively, the BAP through its member banks, and SGX, own approximately 45 percent of PDS Holdings while the PSE owns 20 percent.
"The general structure in most markets is both fixed income and equity securities trading are operated under one group or entity. This has not been the case in the Philippines owing to various reasons but moving forward, we now have this opportunity to review the optimal structure for our market so we can further deepen our capital markets and make it even more attractive to investors,? PSE Chairman Jose T. Pardo explained.
Meanwhile, Mr. Hans B. Sicat, PSE President and CEO added, "We are indeed delighted to engage the BAP and SGX in these discussions not only as co-owners of PDS but owing to the invaluable inputs and expertise they give in this undertaking."
The agreements signed by PSE with BAP and SGX basically provide the framework for discussions and developing a plan that may be pursued by the different parties involved to consolidate the operations of the PSE and the PDS.
BAP President Lorenzo V. Tan also expressed optimism on the impact of the consolidation of the two exchanges on the bond market. "There are possible synergies that could arise from this effort which could hopefully help bring down costs related to the fixed income trading operations of banks and other financial institutions. We can leverage on the strengths of both exchanges to meet this objective," Mr. Tan said.
"We understand that the government and other market players have been watching developments on the possible consolidation of PSE and PDS. We shall be closely coordinating with all stakeholders and we hope we can get their support in any initiative that may result from this undertaking to ensure that the overall goal of developing our capital markets is achieved," Mr. Pardo added.
Related to this, the PSE also disclosed that in anticipation of more products being traded at the Exchange, including the possible offering of fixed income instruments, the PSE is reorganizing its market regulations structure by creating a new independent Capital Market Surveillance Group within the Exchange structure. This new group will absorb the functions of the Capital Markets Integrity Corporation and prepare for surveillance of products beyond equity securities.