Market infrastructure – Philippines
Institutions and organisation
Stock exchanges
The Philippine Stock Exchange, Inc (PSE)
The PSE is the main stock exchange in the Philippines in Bonifacio Global City, Taguig City.
The PSE was formed on 23 December 1992 out of the merger of the country's two former stock exchanges, the Manila Stock Exchange and the Makati Stock Exchange.
Its main function is to facilitate the buying and selling of stocks and other securities through its accredited trading participants.
The trading participants trade daily, except on Saturdays, Sundays, legal holidays, and days when the Central Bank Clearing Office is closed.
PSE trading hours in Philippines time (PHT):
- Pre-Open: 09:00
- Market Open: 09:30
- Market Recess: 12:00
- Market Resumption: 13:00
- Run-Off / Trading-at-Last: 14:50
- Market Close: 15:00
Fixed Income Exchange (FIE)
The FIE infrastructure is an electronic platform for trading, clearing and settlement, depository and custodianship of fixed income securities and its derivatives. The FIE includes the Philippine Dealing and Exchange Corporation (PDEx), Philippine Depository & Trust Corp. (PDTC), and the Philippine Securities Settlement Corporation (PSSC).
PDEx is the exchange of the FIE. PSSC is the entity responsible for matching, clearing and settlement of transactions, while PDTC is the central securities depository. Securities are held in a dematerialised form (book-entry form) and registration of ownership is one of the services provided by PDTC. Record of ownership is either in the name of the beneficial owner or via nominee.
PDEx trading hours in PHT:
- Morning session: 09:00–12:00
- Afternoon session: 14:00–16:00
Consolidation of exchanges
The PSE has proposed the unification of the equities and bond exchanges. The trading platform for equities is run by the PSE, whereas the trading platform for fixed income is run by PDEx, an entity owned by Philippine Dealing System Holdings Corp. (PDS Group). This is still under discussion to date.
The Securities and Exchange Commission (SEC) has allowed the PSE to pursue plans to buy out the Philippine Dealing System Holdings Corp. (PDS Group) upon the PSE’s submission of a detailed, concrete and time-bound operational plan, subject to further review and approval.
The PSE currently owns 20.98% of PDS Group and intends to acquire up to 100%. It should be noted that as per the Securities Regulation Code, no person may beneficially own or control, directly or indirectly, more than 5% of the voting rights of the exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20% of the voting rights of the exchange. However, the SEC may adopt rules, regulations or issue an order, upon application, exempting an applicant from the ownership limit if such ownership or control will not negatively impact on the exchange’s ability to effectively operate in the public interest.
Central securities depository (CSD)
Philippine Depository & Trust Corp. (PDTC)
PDTC provides depository services for equities (common shares that may be classified A&B, preferred shares, warrants, depository receipts) and commercial papers and corporate bonds in the Philippines. PDTC also provides registry and custody services. PDS Group owns 97.72% of PDTC, the Investment House Association of the Philippines (IHAP) owns the remaining 2.28%. The shareholders of PDS Group are as follows: the Philippine Stock Exchange, Inc. (21.01%), Singapore Exchange Limited (20%), Tata Consultancy Services Asia Pacific Pte. Ltd. (8%), Whistler Technologies Services, Inc. (8%) and others with less than 5% ownership each.
The Securities Clearing Corporation of the Philippines (SCCP) is the central counterparty (CCP) for equities transactions executed through the PSE (broker-to-broker equities transactions); whereas the clearing and settlement of non-exchange trades between custodian banks and brokers goes through the PDTC system.
Equity securities are immobilised and dematerialised while debt securities (corporate bonds) are dematerialised within PDTC. Physical shares must be lodged and confirmed as being valid before being traded on the PSE.
Bureau of the Treasury (BTr)
The Bureau of the Treasury (BTr) is the depository for the clearing and settlement of treasury bills and government bonds in the Philippines market. BTr is a not-for-profit public sector entity under the Department of Finance. BTr operates the National Registry of Scripless Securities (NRoSS), an online centralised electronic registry system for official registration of ownership of scripless government securities (treasury bills and government bonds) from the time of origination to redemption. All eligible government securities are registered with BTr-NRoSS in dematerialised form. NRoSS improves efficiency with the availability of delivery versus payment (DvP) and straight-through processing (STP). It also facilitates the electronic transfer of securities for trade and non-trade transactions. Additionally, NRoSS allows participants to settle under true DVP with the cash leg of security transactions settling on PhilPaSSPlus. NRoSS has sole legal authority to transfer title to securities without dispute or encumbrances.
Central Bank: Bangko Sentral ng Pilipinas (BSP)
The BSP is the central bank of the Republic of the Philippines. The BSP is the government body in charge of monetary policy of the country and has jurisdiction over the banking industry in the Philippines. The BSP was established as an independent central monetary authority pursuant to the Philippine Constitution and the New Central Bank Act of 1993 as part of the restructuring of the old Central Bank of the Philippines, which was originally established in 1949.
The BSP's main responsibility is to formulate and implement policy in the areas of money, banking and credit, with the primary objective of maintaining stable prices conducive to balanced and sustainable economic growth in the Philippines. The BSP also aims to promote and preserve monetary stability and the convertibility of the national currency.
The BSP undertakes the following functions:
- Conducting monetary policy;
- Issuing currency;
- Lending to other banks and the government;
- Managing foreign currency reserves;
- Supervision and regulation of financial institutions;
- Determining exchange rate policy.
Clearing house (CCP)
Securities Clearing Corporation of the Philippines (SCCP)
The SCCP was registered with the Securities and Exchange Commission (SEC) in 1996 and was issued a provisional licence to operate as a clearing house for equities market in 1998 to manage the cash and securities settlement of exchange trades. The SEC provided the SCCP with a permanent licence on 1 January 2002.
All eligible trades executed at the PSE are settled via SCCP, which acts as central counterparty (CCP) for exchange trades. Currently, SCCP settles on a broker level only (not brokers-to-custodians).
Registrars/Registration office
The Philippine Association of Stock Transfer and Registry Agents (PASTRA) is an association of transfer agents/registrars. It acts as a self-regulatory body to police its members and address common issues in a formalised manner.
Regulatory structure
Securities and Exchange Commission (SEC)
The SEC is the main regulator for the securities market in the Philippines and oversees the operations of the Philippines Stock Exchange (PSE). It is primarily responsible for approving the issuance and registration of all types of securities required under the Revised Securities Act (RSA) to be registered and approved for distribution in the Philippines. It is responsible for overseeing the operations of securities exchanges, and securities dealers, brokers and salesmen, and ensuring compliance with the provisions of the RSA.
Bangko Sentral ng Pilipinas (BSP)
The BSP Monetary Board is the policy-making unit of the BSP. It exercises supervision over the operations of the banks and has regulatory responsibility for finance companies, non-bank financial institutions performing quasi-banking functions including investment houses and brokerage houses.
Capital Markets Integrity Corporation (CMIC)
The PSE was granted status as a Self Regulatory Organisation (SRO) in August 1988 which allows the PSE the primary role of regulating its own members through the Market Regulatory Division (MRD). The SEC still oversees the PSE and reviews its findings. In May 2010, the Board of the PSE approved the separation of its MRD as a company independent from the bourse. The Capital Markets Integrity Corporation (CMIC) was granted mandate to discharge its functions as the independent audit, surveillance and compliance unit of the Exchange in March 2012. The CMIC is a self-regulatory company wholly-owned by the PSE, monitoring the activities of the PSE trading participants. The CMIC launched its new surveillance system, Total Market Surveillance, in May 2012.