The Philippine Stock Exchange, Inc.
Business Profile:

The Philippine Stock Exchange, Inc. (PSE) was incorporated on July 14, 1992 as a non-stock corporation with the primary objective of providing and maintaining a convenient and suitable market for the exchange, purchase and sale of all types of securities and other instruments. The Company eventually became a stock corporation on August 3, 2001.

On December 15, 2003, pursuant to the demutualization mandate of Republic Act No. 8799 or the Securities Regulation Code, PSE's capital stock was listed by way of introduction. The following year, PSE sold 6,077,505 shares from its unissued stock to five strategic investors by way of private placement. These strategic investors were the PLDT Beneficial Trust Fund, SMC Retirement Fund, Government Service Insurance System, Kim Eng Investment Ltd., and KE Strategic Pte. Ltd.

PSE has a wholly owned subsidiary, the Securities Clearing Corporation of the Philippines (SCCP), which was primarily organized as a clearance and settlement agency for SCCP-eligible trades executed through the facilities of the PSE. The Company is also a shareholder of the Philippine Dealing System Holdings Corporation, the holding company of the Philippine Dealing and Exchange Corporation, otherwise known as the Fixed Income Exchange.

Source: SEC Form 17-A (2009)

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Stock exchange set to extend trading hours

By: Doris C. Dumlao
Philippine Daily Inquirer
1:11 am | Friday, June 10th, 2011

Afternoon trading will soon be reintroduced at the Philippine Stock Exchange to align the local market with the rest of the world..

The new board members of the Philippine Stock Exchange want to extend trading hours well into the afternoon to broaden investors’ participation in the local equities trade.
In a meeting on Wednesday, members of the board arrived at a consensus to reactivate the policy on afternoon trading to “align” local markets with the rest of the world, PSE’s new chairman Jose Pardo said in an interview.

According to Pardo, a former head of the finance and trade departments, the mechanics governing the extended trading hours will have to be drawn up in the next few weeks.
Pardo told the Inquirer that a committee had already been created to study this policy so that the board could discuss the fine print in its next meeting.

He said the PSE under its president, Hans Sicat, hoped to extend trading sessions by the second half of this year.
Currently, local equities trading starts at 9:30 a.m. and ends at 12:10 p.m.
The board is now studying whether it will be feasible to extend trading hours, starting at 2:30 to 4:30 p.m. But according to Pardo, the exact hours have yet to be worked out. He explained that it would be best to look at how other markets in the region were doing before taking a step.
Pardo noted that the PSE had already approved a resolution to revive longer trading hours in 2008, but this was shelved due to unfavorable economic conditions prevailing at the time.

In 2008, global commodity prices were soaring, badly affecting the Philippines, a net importer of crude oil and rice. The following year, the financial crisis erupted, sending shock waves from Wall Street to other global economic centers.

When he assumed the position of PSE chairman in May, Pardo said that boosting trading liquidity in the stock market would be one of his main goals. With the Philippines now widely believed to be in a “sweet spot” in terms of economic fundamentals, the PSE is confident that it will succeed in attracting liquidity by extending trading hours.

Pardo said the PSE had been mindful of cost-benefit implications, but the initial increase in cost on the part of the exchange and the trading participants could eventually be offset by the likely increase in trading volume.
The PSE implemented longer trading hours in early 2000, but this policy was later scrapped.
Additional listing and trading disclosure for the stock dividend of PSE is set on Monday, June 13, 2011.
PSE to sell Tektite property for at least P214 million

THE LOCAL bourse expects to make at least P213.96 million from the sale of its office property in Ortigas Center, Pasig City based on bid documents issued on Friday.
"The Philippine Stock Exchange, Inc. (PSE) is offering its Tektite property for sale to interested parties through a sealed bidding process," the local stock exchange said in a memorandum posted in its Web site.

"It has a total floor area of 4,754.72 square meters (sq. m.). Minimum bid price is set at P45,000 per sq. m., exclusive of value-added tax (VAT)," it added.

The property covers three floors and 21 parking slots at the so-called Tektite Towers.

The development comes after earlier reports that the local bourse will be moving to new headquarters in Bonifacio Global City in Taguig City.

Interested bidders will be required to pay a non-refundable bid participation fee of P10,000 in exchange for a bidding kit that contains reference materials for due diligence.

"Deadline for the submission of the sealed bids is 4:00 p.m. on August 12, 2011. Sealed bids will be opened by the Bids and Procurement Committee of the Exchange on August 15, 2011," the memorandum read.
Bourse mgmt starts review of backdoor-listing policy

Sunday, 12 June 2011 17:14 Miguel R. Camus / Reporter
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The Philippine Stock Exchange (PSE) may tighten the guidelines that allow private companies to list on the bourse through a merger with a public corporation, also known as the back door listing rule, citing the need to boost minority shareholders’ protection.

In a chance interview, PSE president and chief executive officer Hans Sicat said the bourse started the review of its backdoor listing rule “two weeks ago” and will likely conclude this in the latter part of this month or in July.

“The issue here is we want to make sure that the original rationale for why [ the backdoor listing rule] is there cannot be abused by various companies. We just want to review the situation and see whether the rules are adequate,” Sicat said on Friday, declining to give details.

The bourse head also declined to say which instances prompted the PSE’s review.

The development comes as listed East Asia Power Resources Corp. became the most recent firm speculated to become a backdoor listing vehicle after privately held Century Properties Inc. announced the acquisition of a 93.58 percent stake in the inactive power barge operator on May 31.

Asked to comment on that deal, Sicat said the PSE is more interested in reviewing the tender offer details for East Asia Power.

To comply with the mandatory tender offer rule, Century Properties has offered to buy the remaining 6.42 percent it does not yet own for P0.04 each.

This is higher than the P0.038 per share it paid to East Asia Power’s majority shareholders, but well below the P0.28 trading price of the company before the deal was announced. The offer period started in June 3 and will end on July 11.

Continued speculation that Century Properties may take its assets public through East Asia Power has allowed the latter’s shares to surge more than three times to P0.86 each last week, before closing down to P0.73 per share on Friday.

Sicat said the PSE is doing a parallel study on the need to better integrate the tender offer rule with its existing guidelines. At present, imposing the tender offer falls solely under the jurisdiction of the Securities and Exchange Commission.

“When you take a look at the tender offer, it is one of those things that are not integrated with our rules in a well thought out way,” Sicat sad.

Robert Vergara, PSE director and Government Service Insurance System president, said the review of the backdoor listing rule is not likely to result in a major revamp.

“We don’t have to reinvent the wheel. It’s just a question of what other regimes have done to try and prevent some of the abuse that has taken place where a minority shareholder in a shell company is suddenly diluted massively by a backdoor listing,” Vergara said.

“We want make sure minorities do not get the short end of the stick whenever there is [ this type of ] corporate event,” he added.

The back door listing rule and listing by way of introduction are routes offered by the exchange apart from the traditional initial public offering to encourage more listings at the PSE, considered among the smallest bourses in the region.
Issuance of REIT tax rules postponed to July -- BIR

TAX RULES on real estate investment trusts (REIT) should be ready next month instead of end-June after Senate decided it wanted a say on the issue, Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares said late last week.

“[Publication] might be delayed a bit because there is a special request to give it to the committee on oversight,” Ms. Henares told reporters in a chance interview, referring to the tax policy for stock corporations that pool investor funds to manage real estate assets.

“It has to be July,” Ms. Henares said.

Senator Ralph G. Recto, chairman of the Congressional Oversight Committee on the Comprehensive Tax Reform Program, had last week required the state agency to seek lawmakers’ clearance before issuing the tax rules.

This, after the Securities and Exchange Commission (SEC) approved only last month implementing rules that required a 40% public float for REITs after the framework law was passed roughly two years ago. The minimum public ownership should increase to 67% within three years from its listing.

Ms. Henares said the BIR rules will be in line with the revised requirements of the SEC.

“You can deduct dividends as an expense before you deduct the tax,” Ms. Henares said, referring to the perks of the REIT.

REIT firms are required to pay shareholders 90% of its distributable income as dividends, meaning only the remaining amount will be subject to the 30% income tax rate.

“It is a tax-eroding measure because of the dividends that you can deduct as an expense. I think that is P10 billion in tax eroding measures per year,” Ms. Henares said.

But observers said the higher public float might give some property giants pause.

“Our view was that the shift to 67% float in three years might be too quick from the market perspective,” PSE President and Chief Executive Hans B. Sicat told reporters late last week, noting that REITs in Thailand and Malaysia have lower public float levels. -- Neil Jerome C. Morales
BIR to collect taxes on some stock transactions

MANILA, Philippines - The Bureau of Internal Revenue will start imposing the capital gains tax on stock transactions involving listed firms that fail to meet the minimum public float requirement by Nov. 30.

“We will implement it on Nov. 30,” said BIR Commissioner Kim Jacinto-Henares when asked whether the tax agency would pursue an earlier plan to remove tax perks from listed firms that fail to comply with the 10 percent minimum public float rule.

This means non-compliant firms will be charged the typical five percent to 10 percent capital gains tax instead of the stock transaction of one half of one percent that listed firms currently enjoy.

The PSE earlier said there were about 40 out of the 253 listed firms which are non-complaint with the rule. These companies were given until Nov. 30 to raise their public ownership to 10 percent.

The PSE earlier objected to the BIR’s position, citing section 127 (A) of the National Internal Revenue Code of 1997 which states that transactions involving shares of stock and traded through the PSE other than the sale by a dealer shall be subject to the tax rate of “one-half of one percent.”

The BIR, however, maintained that a higher public float would provide liquidity to investors and, at the same time, curb price manipulation.
Signing of ASEAN Link Project Agreement with SunGard Global Trading (Singapore) Pte Ltd.

The Asean Trading Link aims to electronically interconnect the participating markets and facilitate cross border order trading.

The Trading Link is expected to be ready for operational and public use by the first quarter of 2012.

More details in the link below:
Crises scuttle listing plans

THE LOCAL bourse has seen lackluster activity in terms of initial public offerings (IPOs) so far in the first half of the year amid the unfolding euro zone crisis and political unrest in Middle East and North Africa.
Several firms, however, said they will brave the markets in the second half to keep up with earlier plans to list by 2011 even as they face competition from a surge of follow-on offerings expected in that period.

At least five firms had earlier said they planned to launch their IPO this year but have not yet done so: developers ACM Landholdings, Inc., and DMCI Project Developers, Inc. utility Calapan Ventures, Inc., hybrid seed producer SL Agritech Corp., and grocery chain Puregold Price Club, Inc.

Only one new firm -- Megawide Construction Corp. -- has fulfilled plans of a public listing before the first semester ends in two weeks.

“There were several unanticipated risks in the first half like re-emergence of the debt crisis in Greece and conflicts in the Middle East and North Africa that [hurt] investor confidence,” Justino B. Calaycay, Jr., analyst at Accord Capital Equities Corp., said in a telephone interview yesterday.

Mr. Calaycay added that companies instead took advantage of low interest rates by borrowing from banks or issuing bonds to raise funds.

“There were many risks like the [expected] correction of the market from a strong December 2010,”Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., for his part said.

“Then there was the Middle East [unrest], [the earthquake and tsunami in] Japan and worries on the economy of the United States and concerns in Europe that triggered an anaemic IPO activity,” Mr. del Castillo said.

The PSE index -- a basket of 30 stocks regarded as the benchmark of the market’s overall performance -- has already fallen by 1% to 4,173.08 as of yesterday from its levels at the start of the year.

The gloomy performance in the first six months almost mirrored the hesitation last year, when the string of IPOs -- the$539-million offering of Cebu Pacific owner Cebu Air, Inc., the P4.57-billion listing of Nickel Asia Corp. and the P190.9-million share sale of information and telecommunications firm IP Converge Data Center, Inc. -- were held only in the second half.

Aside from Megawide, the only substantial fund-raising program held so far this year was when diversified conglomerate San Miguel Corp. generated $970 million in fresh capital by selling $370 million in common shares and $600 million in convertible bonds.

Things could look up, however, in the second semester, several companies said.

Listing is in the works. The timeline is still this year, maybe in the fourth quarter,” Anna M. Mendoza, vice-president for Marketing and Business Development of ACM Landholdings, said in a phone interview yesterday.

She said the firm, a niche player in the property industry that caters to families of seafarers in Batangas and Cavite, still wants to generate around P1 billion in capital as reported back in March.

Mindoro-based water distributor Calapan Ventures is similarly pursuing its IPO plans later this year.

“We will just have to update our financial statement. Maybe we will already be listed by October,” Leonardo R. Arguelles, Jr., president of Calapan Ventures’ underwriter Unicapital Securities, Inc., said in a separate telephone interview.

Calapan Ventures, a subsidiary of listed Jolliville Holdings Corp., had said it wanted to sell a quarter of its outstanding shares to generate P126.48 million-P168.64 million in fresh capital. This will allow the company to expand its water distribution operations outside Oriental Mindoro.

SL Agritech, however, has shelved its IPO plans altogether.

“So far, we have no more [plans to conduct an IPO],” SL Agritech Chairman Henry Lim Bon Liong said in a telephone interview without elaborating. SL Agritech wanted to raise P1.3 billion to retire debts and expand hybrid rice production in the country and in Southeast Asia.

“Usually the second half is the best period to list because of better earnings figures, the Christmas rally and higher overseas Filipino remittances,” analyst Mr. del Castillo explained.

Even then, issuers will have to contend with the risk of lower liquidity in the markets as other firms scramble to launch additional offerings to meet the minimum public float requirement by November.

“It will be hard for the companies who want to list. The question is if there are enough liquidity in the market,” Mr. Calaycay said. “New issues will really have to prove themselves to encourage investors.”
REIT law may get frosty reception

Monday, 20 June 2011 21:00 Miguel R. Camus / Reporter
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THE Philippine Real-Estate Investment Trusts (REIT) may get a frosty reception from potential issuers, with a new letter from the Philippine Stock Exchange (PSE) asserting its firm stand against the current rules that require REIT owners to give up control of the entity within three years.

A private-sector representative who helped iron out a compromise with the Department of Finance (DOF), which fears that REITs will cut tax revenues, said there is talk that they may return to negotiations with the government should the law fail to attract issuers after implementation.

The PSE letter, addressed to the Securities and Exchange Commission (SEC), comes ahead of the REIT tax regulations due for public release next month.

The tax regulations are also expected to contain another contentious provision relating to the value-added tax (VAT) on one-time property transfers.

The PSE letter focused on the so-called minimum public ownership (MPO) of REITs.

The current implementing rules require that REITs have a 40-percent public float upon listing, which should be raised to 67 percent in three years.

“Increasing it further to 67 percent within three years will render it practically impossible for REIT companies to maintain their listing status and accordingly, their entitlement incentives,” a portion of the bourse’s letter read.

“The PSE analysis suggests that the 67-percent level is not currently a market level that is acceptable,” it added.

The PSE said the initial levels required in the Philippines are already higher than other REIT frameworks in the region, based on a comparative study that includes Singapore, Malaysia, Hong Kong, Thailand, South Korea and Japan, as well as those in Australia, the US and the UK.

A listing is optional in some of these jurisdictions but when a listing applies, the highest minimum public ownership level is set at 35 percent in the UK, followed by 30 percent in South Korea.

None of the countries require the public float levels of REITs to be increased over a period of time.

“The imposition of a 67-percent [public float] requirement within three years from listing makes the [Philippine] REIT regime the most aggressive in the region thus far and hence, least conducive for investments and cross-border listings,” the PSE said.

The PSE said the SEC, which has the power to amend the provisions on the minimum public ownership, should consider the “interests of industry players, who play a crucial role in the successful launch of Philippine REITs.”

Should the SEC amend the rules, it would be the second time the corporate regulator would do so since the REIT Act lapsed into law at the end of 2009.

Sought for comment, SEC spokesman Gerard Lukban confirmed that the corporate regulator received the same letter from the bourse.

“Yes, we got the letter. It will be taken up by the commission,” Lukban said, without elaborating.

The current public float requirement is already the result of compromise talks between the private sector and the DOF.

The original rules approved by the SEC last year required an initial public float of only 33.3 percent, but the DOF balked at the provision, saying the amount was insufficient to allow the broader population to participate in the law.

Eduardo Francisco, cochairman of the Capital Market Development Council (CMDC), an organization that aided in finding a middle ground between issuers and the DOF for REITs, said the one solution moving forward is to “test the market” with the present rules.

“We are still hoping there will be REIT issuers. Should there be none, we can always bring it up to the CMDC,” Francisco said in a separate interview. “We can ask for reconsideration on the MPO and VAT.”

The CMDC is cochaired by Francisco alongside the heads of the SEC and DOF.

The final implementation of REITs will allow firms, such as real-estate developers, to make public certain property assets, like shopping malls and office buildings.

Firms can use fresh capital raised from these activities to expand their businesses while giving the public the opportunity to invest in mature real-estate assets that provide relatively steady returns.

Companies that have earlier expressed their interest to tap the law are Ayala Land Inc., SM Prime Holdings Inc. and Robinsons Land Corp.
Biz Buzz: Fighting manipulation

Last Friday, PLDT was one of several index stocks (along with Ayala, BDO, BPI, First Holdings and Globe Telecom) that were heavily dumped during the projected closing period.

The selldown—by a government-owned broker, no less—trimmed almost P100 from the price of the telecommunications giant’s shares starting at 11:56 a.m. Strangely, this was merely a repeat of what happened the previous day where about P70 was lost off the share price toward the close of trading.

Was this heavy selling of PLDT last Thursday and Friday connected with the Digitel deal as claimed by market pundits? Or was it part of possible market manipulation moves by a foreign investor trying to make money on some over-the-counter equity derivatives, like what happened in the Korean stock market?

According to our source, the PSE’s Market Regulation Division was “clueless” on the matter and its surveillance system was not triggering alerts. Neither was the Securities and Exchange Commission aware of the anomaly (because it lacked a sophisticated surveillance system or market alerts protocol).

Sadly, the solution to suspected market manipulation moves is already available, one of which is Capital Markets Integrity Corp. of the local bourse (whose self-regulatory organization status from the SEC is still pending). The CMIC plans to introduce a projected closing detection test model used to great efficiency by its new partner, the Korea Exchange.

Of course, whatever anti-market manipulation method is ultimately chosen, our source tells us the PSE is asking (nay, begging) the SEC to fast-track the approval of CMIC’s SRO status so it can be empowered to crack the whip on erring brokers and traders.—Daxim L. Lucas

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