Reuters seeks fair playing field

BY KARL LESTER M. YAP - BusinessWorld Reporter The local unit of UK-based global information company Reuters Ltd. is asking for a fair and level playing field amid a possibility that it will lose a part of its business due to a policy issued by the Bankers Association of the Philippines (BAP). In a letter sent to the chief executive officers and treasurers of the country’s banks dated February 1, 2006, Reuters said it wants to get an assurance that it will be allowed to compete fairly with other service providers. "We are writing in connection with the recent developments in the Philippine domestic capital markets. Much has been said about the need for structural reforms to deepen the market, improve liquidity and ensure adherence to global best practices and essentially put the Philippines at par with the more developed countries," Milagros Matias, Reuters Philippines country manager said in the letter. "We are seeking assurances from the BAP that it will create a level playing field for all service providers to the Philippine financial markets," the letter further read. The BAP, an association comprising of the country’s commercial and universal banks, issued a memorandum to its 38 member banks last December 15, 2005 saying it had adopted the recommendations of a reviewing committee to transfer by this month to the Philippine Dealing & Exchange Corp. (PDEX) Foreign Exchange (FX) Spot Module from the existing Philippine Dealing System operated by Reuters Philippines. PDEX is one of the three operating companies under the Philippine Dealing System Holdings Corp. which manages the fixed-income exchange. It is majority-owned and controlled by the BAP. The policy was met with resistance by some banks and the parallel run of the PDEX platform with the Philippine Dealing System, which was supposed to have started last month, has not yet been implemented. Reuters charges $500 a month for the use of its Philippine Dealing System. The system, originally a brainchild of the BAP, started operations in 1992. It provided members banks an active dollar-peso bid-offer dealing capability whose aims include price discovery, increased market liquidity, market-making capability and the overall dealing efficiency among hedgers and traders in the Philippine foreign exchange market. If the migration to the PDEX platform pushes through, Reuters stands to lose its business related to the foreign exchange trading market. Assuming all 38 member banks of BAP are current subscribers of the Philippine Dealing System, Reuters will lose $19,000 a month. Despite this, Reuters said it was committed to further improving their existing products. "We will continue to support this market. We will continue to invest this market," said Edward Haddad, Reuters ASEAN managing director, in a speech during the launch of the upgraded ADAPS on Monday at the Treasury bureau. "We are approaching it in a very positive manner. We are enhancing our products because we believe that the banks will choose the products that will be good for them. We will let the market decide," Ms. Matias added. BusinessWorld tried to contact the BAP but officials could not immediately be reached. In the same letter, Reuters enumerated the various projects it had worked on for the past two decades as part of helping develop the local capital market. Aside from the Philippine Dealing System, it also built an electronic Treasury bills and bonds auction system called the Automated Debt Auction System for the Bureau of the Treasury in 1994. It also developed the front-end system for the electronic settlement of government securities in the Treasury’s Registry of Scripless Securities -- which is the electronic record of the debt obligations of the government all kept in scripless form, that is, not in paper certificates.