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THE
Philippine Dealing and Exchange Corp. (PDEX) is a
conflicted creature playing the role of an exchange
platform on one hand and that of a self-regulatory
organization on the other.
This,
capital-market players told Finance Secretary Margarito
Teves in a letter, makes PDEX an illegal entity bereft
of any kind of legal or moral anchors.
This
early also, market players said, PDEX is feared to
implode from the weight of its own allegedly dictatorial
tendencies owing to its antifree-market and
anti-investor impositions.
In a
letter sent to Teves January 21 this year, the market
players vented their frustrations at PDEX, which they
said “continues to pursue its private commercial
interests and its financial survival under the guise of
developing the Philippine capital market.”
They
meant so-called mapping fees and infrastructure costs
imposed on anyone who trades government securities
over-the-counter—costs that have to be imputed in their
bid rates that also unnecessarily make more expensive
the sale of such securities by government and private
issuers.
The
BusinessMirror earlier reported the concern of, among
others, the Chamber of Thrift Banks, over these hefty
fees, which were blamed for the drastic plunge in value
turnover in government securities trading from an
average of P30 billion to only P6 billion.
As
government debt notes and other securities become more
expensive, interest in the capital market wanes to the
detriment of everyone, investors and noninvestors alike.
“The
cost of PDEX’s excessive operational leverage is passed
on to market participants and, indirectly, unto both
user and investor, which dampened market demand for the
products,” market players said.
According to them, PDEX has idle information-technology
capacity and overhead costs that make its long-term
viability as exchange platform and SRO uncertain.
The
players questioned the platform-cum-SRO status of PDEX
when Memorandum Circular 14 issued by the Securities and
Exchange Commission in 2006 defined the over-the-counter
market as one “created by the buying and selling of a
security on a bilateral basis between parties which
takes place outside of an exchange or alternative
trading system.”
By this
definition, PDEX clearly cannot both be the SRO and OTC
platform at the same time, the players said.
“Even
PDEX’s SRO for the exchange remains questionable as it
is at the same time the infrastructure provider. The
issue of conflict of interest was completely ignored
when the SRO status was granted to [it],” the players
added.
They
also told Teves of their apprehension over PDEX’s
allegedly dictatorial habits, especially its penchant
for issuing regulations without consulting them.
These
tendencies have led to the “accumulation of regulations
that perpetuate an environment of monopoly” over the
capital markets.
“We
write most of all in fear for the future of the capital
markets as the objective of the private interest veers
further from that of establishing a functional market
and closer to that of a dysfunctional market
infrastructure,” they said.
Meanwhile, Senate Minority Leader Aquilino Pimentel Jr.
is asking the Committee on Banks and Financial
Institutions to immediately look into the alarming dip
in the secondary market for government securities
following reports that total value turnovers, which used
to reached P30 billion a day, dropped to an average P6
billion daily.
“This is
a serious matter that should be immediately looked into
by the Senate,” Pimentel told the BusinessMirror, adding
he will contact Sen. Edgardo Angara, banks committee
chairman, to set in motion a thorough scrutiny of the
problem in order to come up with the needed remedial
legislation. (With B. Fernandez) |
