PHILIPPINE BOURSE SAYS DEPOSITORY PLAN BACKED BY BUSINESS GROUPS
(The following press release from the Philippine Stock Exchange was received by e-mail. The sender verified the statement.)
February 19, 2013
Market players laud SEC approval of SCCP depository license
Stock market and business leaders have expressed their support to the recent approval of the Securities and Exchange Commission (SEC) allowing Philippine Stock Exchange (PSE) fully-owned subsidiary, the Securities Clearing Corporation of the Philippines (SCCP), to operate an equities depository function. This came as the SEC recently granted to the SCCP a provisional license to operate a securities depository subject to the fulfillment of conditions and other requirements.
Mr. Hans B. Sicat, President and CEO of the PSE stated that the granting of this license will help promote efficiencies in the market. Systemic risks can also be further minimized when the backroom processes for equities trading are consolidated within the PSE, Mr. Sicat added.
Mr. Michael Ferrer, former President of the Fund Managers Association of the Philippines, lauded the move of the SEC stating the impact this will have in the launching of more products in the market. Giving PSE the mandate for depository services will help facilitate the introduction of more products in the market including a multilateral framework for securities borrowing and lending in the country. I understand that costs will also be significantly reduced and that is always good from a market standpoint, Mr. Ferrer said.
The PSE should serve as a primary example in operational efficiencies given its integral role in the financial market. I think it is about time that the equities depository is integrated within the stock exchange as is done in other markets, Mr. Miguel Varela, President of the Philippine Chamber of Commerce and Industry, noted.
Federation of Filipino Chinese Chambers of Commerce and Industry President Mr. Tan Ching likewise viewed this move positively. Filipino-Chinese comprise a significant portion of the retail stock market investors. This development, in as far as it lessens trading costs and improves investor protection, should be supported, he said.
The Philippine Association of Securities Brokers and Dealers, Inc. (PASBDI) has earlier expressed its support to this move during the public consultations conducted by the SEC on this matter. In our view, this will promote efficiency of the trading process by minimizing operational risk, PASBDI stated. All activities in the trading cycle from trading, clearing and settlement, to depository services - will be handled by a single entity. This model was adopted by the Singapore Exchange, Hong Kong Exchanges and Clearing Limited, and Bursa Malaysia and is considered to be international best practice.
PASBDI further stated that they are optimistic that the significantly lower fees proposed to be charged by the SCCP will result in the overall reduction of friction costs, and will thus benefit both depository participants and investors.
The SEC has been very responsive to the initiatives that we feel are needed to push our market forward particularly with having more product offerings and expanding our market size. We think we have the necessary tools and fundamentals as an economy to be world class, Mr. Sicat explained.
We have been cited by international groups because of the impressive performance of our market. We are attracting more attention globally and I think we need to keep giving credence to this by showing our readiness to take on measures to become more competitive and efficient, Mr. Sicat added.
The PSE shall be pursuing further discussions with various stakeholders in carefully mapping out the implementation plan for its depository program. #