The Philippine Stock Exchange has bucked the proposal of the Securities and Exchange Commission to gradually increase the required minimum public ownership of listed companies to 25 percent, given the current market conditions.
The minimum public float requirement is currently at 10 percent.
PSE president and chief executive Hans Sicat said SEC’s proposal to increase the public float of companies listed in the local bourse would be difficult to implement because of current volatile market conditions.
“I think the issue might be difficult thing to do, partly because of the volatility,” Sicat said.
Sicat said it was also better to let the companies decide for themselves when they wanted to sell additional shares to the public to raise money or to increase their float.
PSE said the public float of listed companies as a group was now more than 30 percent.
Sicat said investors, particularly foreign fund managers, preferred to invest in companies with higher liquidity because they wanted to get in and out of companies with better ease.
SEC chairperson Teresita Herbosa earlier said the corporate regulator planned to start implementing the gradual increase in minimum public ownership of listed firms starting next year.
Under the plan, SEC will increase the minimum public float by five percent every year until it hit the target of 25 percent.
Herbosa said this would make the local capital markets at par with other Asean countries.
Herbosa said other stock exchanges in the region had already imposed the 25-percent minimum float requirement for listed firms.
She said the move would could also encourage small investors to invest in the stock market, instead of putting their hard earned money in investment scams.
Several illegal investment-taking activities have recently proliferated in the country and duped many Filipinos.
Herbosa said there were instances when institutional funds were crowding out local small investors. The SEC sees the need to provide opportunity for small retail investors to increase the participation in the stock market, she said.
The PSE started to implementing the 10-percent minimum public ownership for listed companies in 2011 to help improve liquidity and increase public participation in the local capital markets.