The Philippine Stock Exchange (PSE) is set to release proposed amendments to its Exchange Traded Fund (ETF) rules as part of efforts to revive the country’s ETF market and attract more fund listings.
ETFs are investment funds that hold a basket of assets such as stocks or bonds and are traded on the stock exchange like regular shares.
Under the proposed rules, collective investment schemes, including umbrella funds and unit investment trust funds (UITFs), may list multiple sub-funds under one ETF issuer. The exchange will also allow the listing of different types of securities, including fund units, and permit actively managed ETFs.
To encourage more issuers, PSE plans to reduce the minimum capitalization requirement from P250 million to P50 million, with a possible reduction to as low as P1 million for investment companies with at least a five-year track record.
The amendments would also allow ETF issuers to appoint only one authorized participant to create and redeem ETF shares or units. Market makers would no longer be required to serve as authorized participants. The rules also provide clearer guidelines for ETFs tracking foreign-listed securities.
“We are working on reviving our ETF market and we hope these rule changes will provide the impetus for asset managers to structure and list ETFs,” said PSE president and chief executive officer Ramon S. Monzon.
The exchange is also drafting rules for a Negotiated Trade Reporting Facility, which would enable brokers to execute negotiated trades and help improve market liquidity.
Meanwhile, PSE and the Philippine Depository and Trust Corp. are pushing amendments to securities borrowing and lending rules to allow directed pooled lending, a move expected to attract more foreign institutional investors to the local market.
