PSE urged to help transform PHL capital market as vehicle for Filipinos

Finance Secretary Ralph G. Recto has urged the Philippine Stock Exchange (PSE) to collaborate with the government to transform the country’s capital market into a vehicle that allows ordinary Filipinos to become shareholders in the nation’s growth.

“Wider public access to investment opportunities and a broad-based financial system are key conditions for achieving inclusive growth,” he stressed in his speech at a reception hosted by the PSE at its headquarters in Bonifacio Global City on February 21, 2024.

“With the help of the PSE, I look forward to building the Philippine capital market into a platform where more small companies and wage earners can become shareholders. That will be a measure of how much we have dispersed our economic activities and how inclusive our growth has been,” he added.

The PSE, the country’s sole stock exchange and a self-regulatory organization, ensures a fair, efficient, transparent, and orderly market for buying and selling securities. It also offers a convenient and efficient venue for raising capital to support business growth.

Secretary Recto commended the PSE for adhering to its mandate, serving as the engine for financing the growth of the country’s productive enterprises that create more jobs for Filipinos.

Specifically, the Finance Chief praised the PSE for its proactive capital-raising activities, demonstrated by its efforts to double the number of initial public offerings this year, along with introducing innovations.

These new and diversified innovations include developing a framework for short selling in the Philippines, enabling after-hours Volume Weighted Average Price (VWAP) trading, providing retail investors greater access to the stock market through the offering of local stocks via the Gcash and Maya mobile applications, and studying the framework for Derivatives in the market.

Secretary Recto particularly praised the PSE for successfully diversifying the stock market by encouraging ten small companies to list, with a total issue size of PHP 29.6 billion.

“All these underscore the remarkable progress our stock exchange has made in democratizing wealth. It is not only benefiting large companies but is also making it possible for all Filipinos to become investors, actively contributing to capital aggregation,” he emphasized.

For its part, the Department of Finance (DOF) is committed to implementing capital market reforms that enhance investor protection, corporate governance, shareholder centrality, and broader investor participation.

The DOF is advocating for the passage of its refined proposal on Package 4 of the Comprehensive Tax Reform Program (CTRP), aiming to harmonize and simplify the tax structure on passive income, financial products, and transactions to encourage greater capital inflow and economic activity.

Furthermore, the DOF will pursue the passage of the Capital Market Efficiency Promotion Act, which seeks to reduce the tax on stock transactions from 0.6% to just 0.1% of the stock value.

The Department also supports the Capital Market Development Act, which will address the current private pension system’s weaknesses and, in the process, vigorously develop a dynamic and diversified domestic capital market.

The DOF will ensure that the Securities and Exchange Commission (SEC) executes swift and efficient approvals on public listings to further encourage enterprise growth.

To expand the local capital market, the Finance Chief mentioned that the DOF is looking to amend the charters of the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP), including their potential public listing.

Moreover, he assured the public that the economic team of the Marcos, Jr. administration will continue to foster a stronger economy with favorable conditions for investment.

Secretary Recto urged the PSE to embrace the full digitalization of processes to modernize systems and introduce further innovations to expand market capitalization, noting that no modern economy can grow to accommodate all its citizens if the capital market is backward.

“Remember that an efficient, transparent, and accountable capital market will not only capitalize corporations; it will also help us build a stronger middle class. Our efforts toward modernizing the capital market will lead to a better distribution of the nation’s wealth and reduced inequality,” he stressed.

“In light of this, I look forward to working closely with the PSE in transforming the Philippine capital market as a means for every business and every Filipino to become shareholders in the country’s growth,” Secretary Recto concluded.