PSE targets PDS takeover this year

The Philippine Stock Exchange (PSE) is hoping to complete its takeover of the local bond trading platform this year, paving the way for the unification of the country’s capital market infrastructure, after regulatory challenges halted the decade-long merger plan.

PSE president Ramon Monzon recently told reporters that they were just waiting for the Bankers Association of the Philippines (BAP) to renew with member-banks its lapsed power of attorney before resuming talks to merge with the Philippine Dealing System Holdings Corp. (PDS).

“We have not yet started the negotiations now because BAP’s power of attorney has expired. The BAP is now renewing that with the banks,” Monzon said.“Until that happens, I don’t want to talk to 24 different [banks],” he added.

A power of attorney allows BAP to vote on the merger on behalf of its member banks. The association is among the largest shareholders of PDS, which operates Philippine Dealing and Exchange Corp., Philippine Depository and Trust Corp. and Philippine Securities Settlement Corp.The BAP consists of at least 20 local banks and 24 foreign bank branches.

Jose Teodoro Limcaoco, president of BAP and Ayala-led Bank of the Philippine Islands, earlier said that they first wanted to understand how the merger would be governed before agreeing to the deal.

The PSE nearly completed its takeover of PDS in 2017 after BAP had agreed to sell its shares in a deal that valued the bond trading platform at P2.2 billion. BAP members and institutions currently hold 21 percent of PDS shares. The PSE, for its part, also owns nearly 21 percent of PDS.

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However, the Securities and Exchange Commission (SEC) blocked the merger deal, saying that it would breach the 20-percent industry ownership cap under the Securities Regulation Code.

In November last year, the SEC commission en banc reversed this decision and allowed the bourse to apply for exemptive relief from the ownership limit.To avoid regulatory complications this time around, Monzon said they had “reversed” the negotiation process and first got the SEC’s approval prior to finalizing the deal.

“This time, we got the regulatory approval. Now we just need price negotiation,” he explained.