New PSE chief 'positive' to acquire PDS

Newly-elected president and chief executive officer of the Philippine Stock Exchange (PSE) Ramon Monzon on Saturday said he is hopeful that the local bourse's P2-billion plan to acquire the Philippine Dealing System Holdings Inc. (PDS) would be finally accomplished - in a bid to integrate the fixed-income and capital markets under one roof.

"The biggest challenge facing us is getting the regulatory approval for our purchase of PDS and when that is accomplished even the more bigger task of how to integrate the operations of the PDS into the PSE umbrella," Monzon told reporters in a press briefing in Mandaluyong City.

"We are hopeful, we will be able to comply with all the requirements in good time because we like to complete the transaction as soon as possible," he added.

The new local bourse chief took note that the PSE is currently working to address the "hurdles" or regulatory requirements for the purchase of the PDS - the fixed income bond-exchange operator - which has been under negotiation since 2013.

"We are in continuous talks, basically we need to get an exemptive relief from the SEC (Securities and Exchange Commission to be able to buy PDS. And for us te get an exemptive relief, they laid down certain requirements that we must comply ... so we're in the process of applying those requirements and, of course, the Philippine Competition Commission has also asked us for some documents as they want to review the transaction and see if there is any problem with this combination," Monzon said.

The PSE is planning to apply anew for an exemptive relief on 20 percent industry ownership limit of exchanges and exchange controllers under Section 33.2 of Securities Regulations Code for its plan to take full control of the PDS, when it was rejected by the SEC in March last year.

Another hurdle explained by Monzon is the mandatory notification requirement for mergers and acquisitions worth above P1 billion under the PCC's implementing rules and regulations.

If all the regulatory requirements were met, he said, then the actual share purchase agreement can be signed.

He added that the P2-billion plan to acquire the PDS will be financed through a combination of loans and internal funds.

Monzon also vowed to reduce brokers' ownership in the PSE to comply with the Securities and Regulations Code mandate that no single industry shall own more than 20 percent of exchanges.

"It's bringing down the ownership of brokers in the exchange from the present 27.9 percent to 20 percent," he said.

Among the options being explored are convincing some brokers to sell their shares to non-brokers, private placement of shares, and offer preferred voting shares.

"But the immediate thing we're working on now is to have few inactive brokers, who own shares and are being counted as part of the 27.99 percent so we're working and having dialogue with SEC to have these shares corresponding to these non-operating brokers taken out to the computation of the 27.99 percent. That's kind of substantial 3.4 percent that makes the job easier," Monzon said. —ALG, GMA News