THE Philippine Stock Exchange, Inc. (PSE) has proposed to prohibit trading participants from buying shares in the exchange to ensure that they comply with the 20% industry ownership limit.
In a memorandum circular posted on its Web site last Friday, the bourse operator suggested amendments to the PSE Rules Governing Trading Rights and Trading Participants, in compliance with the Securities and Exchange Commission Rules Governing the Trading of PSE Shares.
The SEC Rules state in part that broker-dealers are prohibited “from buying PSE shares for its own account or for the principal account of another broker-dealer until such time that the brokers and dealers, as a business industry, are in compliance with the 20% rule on industry ownership.”
The corporate regulator also said that the moratorium will be automatically placed whenever the limit is breached.
Accounts of related persons of a broker-dealer, including its subsidiaries, affiliates, directors, officers, principal stockholders, nominees to the PSE, spouses, and relatives up to the fourth civil degree by consanguinity shall also be prohibited from buying PSE shares.
With this, the PSE proposed to incorporate Section 6 under Article III of the PSE Rules Governing Trading Rights and Trading Participants, which states that: “Trading participants shall, at all times, abide by the SEC Rules Governing Trading of PSE Shares and any guidelines or directive issued by the Exchange in the implementation of said rule.”
The PSE will impose a P100,000-penalty for the first offense, P200,000 for the second offense, and P300,000 as well as suspension of trading operations for at least five straight sessions for the third and subsequent offense.
The 20% industry ownership limit is outlined under the Securities Regulation Code (SRC).
Item C of Section 33.2 of the SRC states that “no person may beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange.”
Total broker shareholders at the PSE stood at 19.85% as of July 31, according to a regulatory filing by the PSE.
The PSE is accepting comments for the proposed amendments until Dec. 3. — Arra B. Francia
