A trader talks on his phone in front of an electronic board showing a downtrend in trading at the Philippine Stock Exchange on June 29 after Greece closed its banks and imposed capital controls. AP
In the early 1990s, President Ramos forced the two rival local stock exchanges—the Makati and Manila bourses—to merge. It was a shotgun wedding that over the years created a more efficient unified house that we now know as the Philippine Stock Exchange (PSE).
These days, the economic managers of the Aquino administration are pushing for another major consolidation in capital market infrastructure—one that seeks to marry two separate trading platforms for different asset classes. The unification of the stock and bond markets, they believe, will boost volumes and unlock huge savings in maintaining and continuously enhancing financial market architecture. After all, while local markets have gone a long way in the last two decades as far as expanding volumes and improving governance systems are concerned, they still have a lot of catching up to do when pitted against regional peers.
Pretty soon, this dream of a consolidated capital market infrastructure will finally be realized. In the next few weeks, the PSE is set to formalize its acquisition of the controlling stake in Philippine Dealing Systems Holdings Corp. (PDS Group) after making an offer to shareholders to sell their shares. The majority of the shareholders have already agreed to sell their shares to the PSE, including the banks. Even the Singapore Exchange Ltd. (SGX)—previously torn between supporting the Philippines’ capital market reforms and making a more decent profit out of its investment in PDS—is expected to give in.
PDS Group is the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depositary and Trust Corp. (PDTC) and Philippine Securities Settlement Corp.
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Selling shareholders
The PSE earlier signed a deal to buy the 28.91-percent stake held by the Bankers Association of the Philippines (BAP) and some member-banks in PDS, raising its interest to nearly 50 percent.
