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Sunday, February 25, 2024

Stock exchange gets approval to resume talks on PDS buyout

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The Securities and Exchange Commission (SEC) said Friday it approved the Philippine Stock Exchange Inc.’s (PSE) bid to negotiate the acquisition of additional shares in Philippine Dealing System Holdings Corp.

The corporate regulator said in a statement it allowed the PSE to apply for exemption from the 20-percent cap in the ownership of a single industry in an exchange, once negotiation for the planned buyout of the PDS Holdings is finalized.

It also directed the PSE to submit and present a detailed, concrete and time-bound operational plan for the acquisition, subject to review and approval by the SEC.

The PSE owns 20.98 percent of the issued and outstanding capital stock of PDS Holdings, the operator of the country’s fixed-income trading platform. The PSEs seeks to acquire up to 100 percent of PDS to unify the capital markets.

Other major shareholders of PDS are Singapore Exchange Ltd., Bankers Association of the Philippines, Tata Consultancy Services Asia, Whistler Technologies Services Inc. and San Miguel Corp.

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Based on the initial submissions made by PSE, the proposed acquisition will result in the integration of the country’s equity and fixed-income exchanges that would allow for the delivery of more efficient and more types of products, services and better risk management systems for financial services.

The PSE expressed interest in acquiring more shares in PDS as early as 2013. The planned acquisition did not push through, as the SEC thumbed down the PSE’s request for exemption from the 20-percent cap in the ownership of a single industry in an exchange.

The Securities Regulation Code provides that no person may beneficially own or control, directly or indirectly, more than 5 percent of the voting rights of the exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the exchange.

The SEC said, however, it may adopt rules, regulations or issue an order, upon application, exempting an applicant from the ownership limit if such ownership or control will not negatively affect the exchange’s ability to effectively operate in the public interest.

PDS Holdings through unit Philippine Dealing & Exchange Corp. operates the organized secondary market for the trading of fixed-income securities issued by corporations and the government.

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