PSE to BOI: Require firms enjoying perks to go public

A man pedals past the Philippine Stock Exchange (PSE) in this file photo.

The Philippine Stock Exchange Inc. (PSE), the operator of the country’s equities market, said it has asked the Board of Investments (BOI) to require all companies availing of incentives from the government to go public.

PSE President and CEO Ramon S. Monzon said the move is part of the bourse’s effort to encourage more small and medium-sized firms to list their shares on the PSE.

“Hopefully we can convince the BOI to require that all companies that avail of the incentives from the government will be offering shares to the public,” Monzon said during the PSE’s midyear online stock market briefing.

At the moment, only seven firms are listed on the Small, Medium and Emerging (SME) board of the PSE.

The PSE also launched a handholding program for SMEs in which it will guide companies to prepare them for their initial public offering (IPO).

“And I’m glad to report at the moment, we are handholding 23 companies that are interested in doing an IPO,” Monzon said.

The PSE earlier eased the listing standards for SMEs, such as reducing the amount of time required to operate to two years from three years. Previously, SMEs need to have positive earnings in the three years they are in operation.

“Now, even if you are not profitable, for as long as your sales figures show 20 percent increase, you are qualified for listing,” he said.

“Finally, if you can’t meet the two [matrices], all you need to do is to look for a sponsor accredited by the PSE. The listing sponsor will be the one to assess the applicant’s suitability; they will be the one to endorse the listing applicant to the PSE.”

The sponsor will be responsible for handholding the company from its IPO preparation phase to three years after listing to make sure that the company complies with the initial and continuing listing rules, he said.

Other programs of the PSE to encourage more firms to use the exchange to raise funds include allowing preferred shares-only listing and the easing of the lock-up rule.

The bourse is also targeting to allow short selling later this year as well as the launch of the PSE’s new mid-cap and high dividend indices.

On the technology side, it plans to launch its own data analytics platform as well as expand the PSE EASy platform to allow small investors to subscribe to stock rights offerings, follow-on offerings and retail treasury bonds in addition to IPOs.

The PSE also aims to go live with its new clearing and settlement system by the first quarter next year which will shorten the settlement cycle to T+2 (day traded plus two trading days) from the current T+3.

The bourse is proposing amendments to its lock-up rule in the main and SME boards to provide an exit mechanism for alternative investment funds or their investment arms.  Monzon said the PSE expects to complete all regulatory approvals, such as for offshore collateral and securities lending, to finally allow short selling in the bourse which is seen to generate more trading activity.

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