MANILA, November 20, 2003  (STAR) By Zinnia B. Dela Peña - The Asian Development Bank (ADB) has granted a $335,000 technical assistance (TA) package to further strengthen the Philippine financial market and improve the governance of the Philippine Stock Exchange.

The TA will be implemented over 10 months and is expected to commence in January 2004.

The objective of the proposed program is to promote the development of the local capital market through the strengthening of corporate governance and improved regulation of Securities and Exchange Commission-registered exchanges.

In particular, the TA will strengthen PSE disclosure requirements and its SRO (self-regulatory organization) functions as well as enhance the bourse’s compliance and surveillance skills. It is also seen to strengthen the technical capacities to properly regulate a self-listed exchange and other trading markets.

The scope of the TA will include an assessment of the corporate structure and governance practices of the PSE, identifying appropriate options to deal with conflicts of interest in performing self-regulatory functions as a for-profit listed company and review and define the roles and responsibilities of the PSE board.

It likewise includes identifying appropriate steps to enhance the PSE’s profitability profile to attract investors and diversify ownership of the exchange.

The SEC, on the other hand, would need assistance in reviewing the internal governance of the bourse to make the shares attractive enough to the public. Since it will directly regulate the movement of the PSE shares once listed, the SEC will need to set new parameters for PSE to regulate the market conduct of listed companies outside its SRO status.

The money will also be used to fund the proposed establishment of an innovative trading facility.

The ADB earlier released the first tranche of a $150-million loan intended for the development of the non-bank financial sector and capital markets following compliance with the conditions tied to the grant.

The ADB will assist the SEC in the development of regulations for risk-based capital standards for securities broker-dealers and investment houses, taking into account international best practices and the current prudential standards applicable to such institutions.

The program also involves the review of the adequacy of securities investors‚ protection scheme for the protection of clients’ securities and cash and/or the proposed investor protection scheme for the pre-need policy holders in the event of the insolvency of a broker, dealer or underwriter registered with SEC. It will recommend changes in coverage, size of funds, membership, adequacy of assessment, and amendments to existing SEC regulations and/or securities code and/or pre-need code, as appropriate.

Reported by: Sol Jose Vanzi

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