PSE withdraws request for PCC to review merger

THE merger between the equities and the fixed-income securities trading floors may take a little longer after the Philippine Stock Exchange (PSE) Inc. decided to pull out its request for the local antitrust body to review the combination. The PSE said it may refile the request for review at another time.

Johannes Benjamin R. Bernabe, Philippine Competition Commission (PCC) official, said the PSE, which owns the equities trading floor, on September 4 withdrew its request for review after the agency asked for additional information on the merger.

“There are certain information that are needed for us to make a determination that the transaction does not have anticompetitive practice,” Bernabe told reporters on Wednesday.  The said information included some operational efficiencies when the two platforms are merged. It pertains to plans of operation after acquisition, possible efficiency of the transaction and how will this benefit the public, investors and other stakeholders.

“We sat down and they came into agreement that PSE and PDS [Philippine Dealing System] to withdraw and refile the notification [for review], so they will have more time,” Bernabe added.

He explained that, normally, parties to an acquisition or merger must notify the PCC and pay a P250,000 fee for the review of the transaction. The merger or acquisition may only proceed 30 days after notification.

When the PCC requires the submission of additional information, the second phase of review is triggered and the parties must submit the requested information within 60 days and pay a fee amounting to a fraction of 1 percent of the value of the transaction but at least P1 million and no more than P5 million.

The PSE filed its notification sometime in July after it signed an agreement with the Bankers Association of the Philippines for its 23.8-percent stake in PDS Holdings Corp.

The PDS Holdings owns the Philippine Dealing and Exchange Corp. (PDEx), the trading platform for the fixed-income market.

Aside from the PCC, the PSE also needs approval from regulators Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas.

The SEC early last year thumbed down the said merger, prompting the PSE to go back to its drawing board and chart a new scheme in buying out the PDS.

The PSE may now end up not taking all of the businesses of the PDS, such as the latter’s government-securities business or debt paper being sold by the Bureau of the Treasury.

For most of 2014 and 2015, the PSE was working on the P2.25-billion acquisition for a majority ownership of PDS.

Things headed south, however, when the PSE asked the SEC for its approval, hoping to secure the regulator’s nod in November 2015.

The SEC inquired mainly on which system the merged platform will use, since the PSE and PDEx are both using different schemes that ranged from trading-platform model to delivery-versus-payment schemes, settlement and clearing systems and also which type of depository to use.