PSE seeks SEC nod for final draft of ETF rules

Posted at 01/29/13 1:10 PM

MANILA, Philippines - The Philippine Stock Exchange (PSE) is seeking the Securities and Exchange Commission's (SEC) approval of the proposed rules on the listing and trading of Exchange Traded Funds (ETFs).  

"We are thankful to industry practitioners who provided very helpful insights during the period of public comments. We are eagerly awaiting the

SEC's guidance on this new asset class which, based on the comments we received, appears to be generating a lot of interest already from the public," PSE President and Chief Executive Officer Hans B. Sicat said in a statement. 

ETFs are similar to mutual funds as they track as set of stocks like the 30-member PSE index. The ETFs will make it easier for investors with smaller budgets to ride the main index's gains.

The difference is they are traded on the stock market and you invest in them the same way you buy any other stock. The proposed ETF rules provide for transparency and investor safeguards, and adhere to theInternational Organization of Securities Commissions (IOSCO) principles for regulation of ETFs and best practices in other jurisdictions.

Under the proposed rules, an ETF who wants to list on the PSE should have a minimum paid-up capital of at least P250 million. 

The company may undertake an offering of its ETF shares  when the registration of such ETF shares becomes effective and its listing application is approved by

the Exchange. The offering will not be covered by the PSE's IPO distribution rules, nor shall the lock-up and track record requirements be applied. 

The underlying securities comprising the index which the applicant ETF intends to track must be listed and traded in a registered exchange and should have sufficient liquidity. 

The ETF should also have public ownership of at least 10% of its issued and outstanding shares.

All necessary information should be available to allow its ETF shareholders to exercise their rights. The ETF should also have an Investor Relations Office.

The ETFs will also have to comply with disclosure rules of the exchange, as well as the reportorial requirements under the SEC rules.