PSE launches buyback, creates preferred shares for brokers

Philippine Stock Exchange

THE Philippine Stock Exchange (PSE) Inc., the operator of the country’s equity market, has again moved to bring down the ownership of the brokers to 20 percent by launching a program to buy back shares that they still hold, while creating preferred shares to be offered solely to them. 

In its disclosure, the PSE said it will repurchase some P532.01 million worth of common shares that it will conduct through end of September. 

The PSE will use cash to buy back the shares but will book these as treasury shares. 

It will then create 3.5 million preferred shares, which are nonvoting and nonconvertible. The PSE can also redeem the said shares beginning on its third year.

“The nonvoting preferred shares shall only be issued to brokers. The terms and conditions of issuance and nonvoting preferred shares to brokers, including the dividend rate thereof shall be fixed by the board of directors,” the PSE said. 

The PSE, however, needs the approval of its shareholders before it can proceed with the creation of the preferred shares. It will also need to amend its articles of incorporation to reflect such change. 

As of early this year, the brokers still own 26.44 percent of the exchange, or still above the mandatory 20-percent cap of ownership of a particular sector.

The PSE said earlier it is in “earnest efforts to comply with the 20-percent industry limit provided by the Securities Regulations Code.”

In March last year, the PSE was able to bring down the brokers’ ownership to about 21.71 percent, shortly after listing its 11.5 million shares in stock rights offer to existing shareholders, a measure intended to pull down brokers’ ownership to the minimum requirement. It, however, was not able to count many of the shares still being held by brokers’ principal shareholders and related parties in omnibus client accounts.

The PSE raised P2.98 billion from the measure, proceeds of which was supposed to be used for the acquisition of PDS, or the Philippine Dealing System, among others. To date, the PSE still has not bought the PDS, which owns the Philippine Dealing and Exchange Corp., the operator of the fixed income trading platform. 

“The Exchange configured its trading system to automatically prevent the posting of a buy order for PSE shares from accounts that will push it over the 20-percent threshold, or if it is still below 20 percent, but the matching of the buy order will cause broker industry ownership to breach the 20 percent level,” Ramon Monzon, PSE president, said earlier.

Image credits: Tupungato |


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