Competition watchdog says PSE withdrew notice for PDS merger

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PSE trading floor
The Philippine Stock Exchange (PSE) trading floor -- BW FILE PHOTO

By Arra B. Francia, Reporter

THE country’s competition watchdog on Wednesday said the Philippine Stock Exchange (PSE) has withdrawn the notification for a review of its planned merger with the Philippine Dealing System Holdings Corp. (PDS group).

Philippine Competition Commission (PCC) Commissioner Stella Luz A. Quimbo said the PSE has withdrawn its notification last Sept. 4 since they have yet to comply with the requirements being asked by the PCC.

“This was after a consultation with the PCC after we issued a request for more information after we moved into Phase 2. So they made a determination that they need more than 60 days to comply with that. So they decided that instead of just asking for the usual 15 to 30-day extension, that they would just refile,” she told reporters in Ortigas on Wednesday.

The PSE had initially filed the notice for a review of its P2-billion deal with the PDS Group last May 19. Under Republic Act No. 10667 or the Philippine Competition Act, the PCC is tasked to review transactions valued at over P1 billion to ensure that they do not engage in anti-competitive practices.

“Based on the information request of PCC and consistent with the rules of the law due to the additional acquisition in PDS, the PSE deemed it appropriate and efficient to file anew with the PCC to incorporate recent developments and address other queries,” PSE Chief Operating Officer Roel A. Refran said in a text message when sought for comment. Mr. Refran said the PSE will likely refile within the week.

The review of the transaction will be conducted in phases, with the first phase to last at a maximum of 30 days and is at priced at P250,000. Should the PCC need more information to review the deal, it would proceed to Phase 2, priced at a fraction of 1% of the transaction value, and will last for a period of 60 days.

Ms. Quimbo declined to give specifics on the additional information requested from the PSE, but noted that it mostly centers on the transaction’s effects on operations.

“It’s really more details on the operations, to ensure that there’s no substantial impact on competition in the market, and the possible efficiency gains from the transactions,” Ms. Quimbo said.

Once the PSE refiles the notification for review, the PCC will start with the first phase again.

Ms. Quimbo said the PSE did not indicate when they plan to refile the notice.

PSE officials were not immediately available for comment.

Clearance from the PCC is part of the regulatory approvals the PSE needs to proceed with its merger with the country’s fixed income bourse, a deal it has been working on since 2013 in order to achieve synergies in operations for the two capital markets.

The PSE is currently targeting to bring down broker ownership to 20% in order to secure approval from the Securities and Exchange Commission, which imposes a 20% single industry share ownership limit.

Last August, the PSE announced it will sell up to 11.5 million shares as part of efforts to decrease the ownership of trading participants in the company. It is also in the process of declassifying inactive brokers, which will help bring down broker ownership from the current 27.9% to around 23% to 24%.

Shares in PSE were unchanged on Wednesday, closing at P236 apiece.