GPDRs will be peso-denominated instruments that represent an economic interest in a foreign security listed on an overseas stock exchange.
Holders don’t get voting rights in the underlying foreign security, but they will have the option to convert these into actual shares, depending on the overseas issuer’s rules.
Why is the PSE doing this?
While the exchange is developing other products to boost domestic trading interest, it is also actively participating in initiatives to enable cross-border trading.
This will allow counterpart exchanges to facilitate trading for their domestic investors to buy stocks in the Philippines.
“GPDRs will pave the way for cross-border trading in the PSE. Aside from expanding PSE’s product offering, GPDRs will enable investors to diversify their portfolio and hold foreign securities without having to directly trade in overseas markets,” PSE president and CEO Ramon S. Monzon said in a statement.
Which foreign stocks can be purchased?
The proposed rules allow GPDRs to be issued by PSE trading participants, banks, non-bank financial institutions authorized by the Bangko Sentral ng Pilipinas, and investment companies under the Investment Company Act.
Eligible issuers must have at least three years of operational history and P100 million in paid-up capital.
The rules also outline listing requirements, public offering procedures, fees, disclosure obligations, and trading and settlement processes for GPDRs.
How soon can this be launched?
The PSE has asked equities market stakeholders to review and provide feedback on the proposed GPDR guidelines.
“The rules we came up with were derived from consultations with stakeholders and best practices of our peers in the region. Through this comment period, we hope to get more insights from a broader group of market participants,” Monzon said.
