It’s officially dead. The proposed merger of the Philippine Stock Exchange and the Philippine Dealing System Holdings Corp. Group that would have unified the capital market structure in the country, that is.
The deal-breaker was the Securities and Exchange Commission’s decision to reject the PSE’s request for exemption from the 20 percent cap in the ownership of a single industry in an exchange, given its intention to buy out all other shareholders of PDS, the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depository and Trust Corp. (PDTC) and Philippine Securities Settlement Corp.
For now, sources from the PSE said the top leadership was not keen on re-calibrating the proposal or submitting any appeal.
In a nutshell, top SEC officials said the PSE had not been able to demonstrate any meaningful benefit to the investing public and capital markets under a “monopoly” or any concrete plan to improve trade surveillance and transparency, clearing and settlement stability, business risk mitigation as well as governance and management competence.
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SEC Chair Teresita Herbosa said there was a reason why the 20-percent limit was prescribed by the law. An exemption is warranted only if it will “not negatively impact the PSE’s ability to operate for the public interest,” she said.
SEC Commissioner Ephryo Luis Amatong cited concerns on how the shareholder structure would look like. Instead of having a merger of equals–the route preferred by the government and one that would not require “exemptive” relief–the PSE’s plan was to buy out all other shareholders to gain 100 percent control of the unified entity.
