THE Philippine Stock Exchange Inc. (PSE) said the government should enter into mutual recognition agreements with its regional peers in Southeast Asia, mainly on buying and selling stocks.
PSE President and CEO Hans Sicat told reporters it is “high time” that the Securities and Exchange Commission (SEC) allow foreign shares to be traded and sold domestically, without having to go through the tedious process of registering their stocks locally. Sicat said top Asean countries Thailand, Singapore and Malaysia have already forged a mutual recognition agreement and could trade shares with one another.
“In other words, these countries are now doing mutual recognition, similar to a bilateral or multilateral agreement. These countries have relied on their respective regulator’s counterparts,” he said.
The same approach should be adapted in the Philippines, as other Asean countries would then look on the PSE and the SEC’s representations as recognized institutions, Sicat added.
“The country’s counterpart regulators in other Asean member-countries would assume any shares registered and traded with the Philippines’s SEC and PSE are valid and existing, and may, likewise, be bought and sold in other Asean member-countries without having to require our local shares to be registered there and vice versa,” Sicat said.
Sicat added that mutual recognition is a necessary condition for the country’s equities market to benefit from the Asean market integration even prior to the harmonization of various equities trading rules of Asean member-countries.
“The implication is that, without having this mutual recognition, it would be a one-way highway and any foreigner can buy Philippine security, while any Filipino cannot buy a single share. That is not the whole point of trading. In such case, we are building a one-way road,” he said.
“The Philippine equities market is very small compared with its counterparts in the region. If we require these Asean shares to be registered here, and redo their entire documentary requirement just to comply with ours, then they would rather go to other nine other Asean member- countries. It is actually our loss.”
SEC Chairman Teresita Herbosa said the agency is now looking at either waiting for the rules in various member-countries to be harmonized, but is also looking at considering the PSE’s recommendation to enter into mutual recognition agreements with other Asean countries.
“There are two aspects that we are considering now, first is for all the Asean member-countries’ rules regarding the sale of shares be harmonized and the second one is the mutual recognition deal,” Herbosa said.