• Home
  • Domestic bonds
  • CMDC caps achievement on Duterte watch with first-ever fully digitized PHL bond float

CMDC caps achievement on Duterte watch with first-ever fully digitized PHL bond float

By on June 28, 2022 0

MANILA – The Capital Market Development Council (CMDC) capped off its array of achievements under the Duterte administration with the successful issuance of the Philippines’ first-ever digital corporate bond using blockchain technology, as well as several initiatives aimed at digitize transactions and make them easier. and more convenient for small investors to further expand their participation in the domestic capital market.

Online accounts accounting for 71.5% of total investor accounts at the local stock exchange in 2021 demonstrate the impact of digital acceleration in the national capital market on Duterte’s watch.

From 302,516 online accounts in 2016, this number has grown steadily by an average of 30.8% over the years to 2021.

Last year, 1,159,034 of the total 1,620,017 trading accounts were online accounts, according to a report by the Philippine Stock Exchange (PSE) to CMDC.

Digital acceleration in the capital market was also highlighted with the Philippine Dealing & Exchange Corp listing. (PDEx) on June 2, 2022 of the country’s first digital bond by Union Bank of the Philippines (UnionBank).

This historic event made Philippine Dealing System Holdings Corp. (PDS Group) the first Asian domestic market infrastructure to launch a digital ledger and digital deposit based on Distributed Ledger (DL) or blockchain technology which underpins the issuance of digital bonds.

Originally intended to raise 1 billion pesos from 200 bondholders, the digital bond was oversubscribed 11 times, with UnionBank issuing 11 billion pesos worth of debt securities to nearly 900 investors, said Ma, managing director of the PDS group. Theresa Ravalo at the CMDC meeting on June 6th.

The meeting was the last under the Duterte administration.

The digital processes involved in the issuance were fully transparent to underwriters, issuers and bondholders with paperless submission of issuance documents for listing and register via the Online Securities Issuance Portal (e-SIP ), Ravalo said. She added that the digital market infrastructure for settlement was also made interoperable with traditional market infrastructure for trading and clearing while being fully compliant with applicable securities laws and regulations.

A public-private sector coordinating body responsible for facilitating the development of the Philippine capital market, the CMDC is co-chaired by Secretary of Finance Carlos Dominguez III; attorney Benedicta Du-Baladad, former president of the Financial Executives Institute of the Philippines (FINEX); and Emilio Aquino, Chairman of the Securities and Exchange Commission (SEC).

Dominguez thanked CMDC members for their six years of “highly productive” work under the Duterte administration.

CMDC members include senior officials from the Bureau of Treasury (BTr), Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Insurance Commission (IC), Bankers Association of the Philippines (BAP), Philippine Stock Exchange (PSE), Philippine Dealing System Holdings Corp. (PDS Group), Philippine Dealing and& Exchange Corp. (PDEx), Investment Houses Association of the Philippines (IHAP), Philippine Life Insurance Association (PLIA), Philippine Insurers and Reinsurers Association (PIRA), Philippine Federation of Pre-Need Plan Co. Inc. (PFPPCI), Association Philippine Securities Dealers and Brokers Inc. (PASBDI) and the Philippine Fund Managers Association (FMAP).

During the meeting, the BTr indicated that it was on track in implementing its digitization initiatives to broaden investors’ access to government bonds, with the full integration of payment platforms. Pesonet and Instapay to the Bonds.ph mobile app, and with the end-goal to enable retail investors to easily buy and sell bonds through this app and other mobile apps.

The BTr is also working on bond financing options for local government units (LGUs) to make them more fiscally viable in preparation for the full devolution of some national government functions following the Supreme Court ruling ( SC) increasing their share. in national tax revenue, National Treasurer Rosalia de Leon said at the meeting.

To encourage small and medium-sized enterprises (SMEs) to expand their financing opportunities by accessing the capital market, the PES introduced its SME Listing Engagement and Assistance Program (LEAP) and amended its listing rules for its main and SMEs (small, medium and emerging).

A total of 36 companies are enrolled in the LEAP program, two of which have already been successfully enrolled in the SME board in the first quarter – CTS Global Equity Group Inc, which raised 1.38 billion pesos in April, and Haus Talk Inc. , which raised 750 million pesos in January.

Another LEAP registrant, Raslag Corp., entered the main draw in June and raised 805 million pesos.

To address the low level of competitiveness in the domestic capital market, regulations and systems have been put in place for products such as exchange-traded funds with the publication of SEC rules on exchange-traded funds and the launch of new tradable of ASEAN exchanges. ASEAN indices.

Under the Duterte administration, the flawed listing rules for Real Estate Investment Trusts (REITs) were corrected in 2020, allowing this powerful financial instrument to take off after a decade of inactivity.

After the reviews, several REITs have been successfully listed on the stock exchange, opening up another attractive investment opportunity for retail investors.

The SEC released key policy reforms to bolster the stability of capital markets. These include rules on simplified onboarding procedures for low-risk accounts, which aim to allow more Filipinos to participate in business ownership and other investment opportunities to achieve their financial goals. .

In addition, the Corporate Debt Vehicle Rules have been released which will primarily invest in corporate debt securities of large corporations and mid-sized companies. This aims to cushion the economic impact of the COVID-19 pandemic and support liquidity needs and business recovery.

Finally, the Rules on the number of independent directors, sector representatives of stock exchanges and other organized markets have been published. It aligns with leading and comparable market best practices in many economies, where independent directors make up the majority of stock exchange boards.

In addition, the Financial Institutions Strategic Transfer (FIST) IRR Act came into force after its publication on March 29, 2021, allowing the creation of companies to invest in or acquire non-performing assets (NPAs) of covered financial institutions. This resulted in the creation of five (5) FIST Corporations. This would alleviate the pandemic-induced financial hardship faced by some affected financial institutions (FIs).

The amount of initial public offerings (IPOs) authorized by the SEC reached an all-time high in 2021 amounting to approximately 145.7 billion pesos, of which 66.1 billion pesos came from REITs. In May 2021, the SEC approved the largest IPO in the country and the second largest in Southeast Asia, which is that of Monde Nissin Corporation for up to Php55.89 billion.

The SEC has also operationalized the PhiliFintech Innovation Office (PhiliFINNO). The PhiliFintech Innovation Office was launched on July 30, 2021 to foster innovation and personalize the fintech landscape in the country.

The SEC was admitted as the fourth signatory to the ASEAN Collective Investment Schemes (CIS) Framework last year, which is a step closer to allowing qualified mutual funds and their fund managers to offer retail investors directly to Singapore, Malaysia and Thailand, and vice versa.

In 2019, the SEC also released rules and regulations governing crowdfunding in recognition of this innovative way of raising capital for business ventures using internet-based platforms. (DOF)