PSE, BAP, SGX initiate steps to merge stock and fixed-income securities trading

The Philippine Stock Exchange (PSE) on Tuesday said it has signed separate agreements with other owners of Philippine Dealing Systems Holdings Corp. (PDS) on the merger of the stock and fixed income exchanges.

 

In a statement posted on its website, the PSE said it signed a Memorandum of Agreement with the Bankers Association of the Philippines (BAP) and with Singapore Exchange (SGX) which will provide the framework for discussions and developing a plan to consolidate the operations of the PSE and the PDS.

 

PDS operates Philippine Dealing & Exchange Corp., the country's platform for trading bonds and currencies.

 

It also runs the Philippine Depository and Trust Corp., the lone provider of securities depository, registry and custody services. 

 

BAP, through its member banks, and SGX, own approximately 45 percent of PDS 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,” said PSE chairman Jose T. Pardo. “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.”

 

“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,” Pardo added.

 

Meanwhile, BAP president Lorenzo V. Tan noted the merger could 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,” Tan said.

 

The PSE also said it is reorganizing its market regulations structure by creating a new independent Capital Market Surveillance Group within the Exchange structure which will absorb the functions of the Capital Markets Integrity Corporation and prepare for surveillance of products beyond equity securities.

 

In March, Finance Secretary Cesar Purisima said the government is pushing for the merger of the equities and fixed income market exchanges to widen the volume of trades and improve the country's capital markets. — Danessa Rivera/VS, GMA News