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MANILA, Philippines – The Securities and Exchange Commission (SEC) is contemplating on increasing the minimum public float for listed companies, which could likely be implemented in January 2017.
Since then, the increase in minimum public float is eyed by the commission due to the market’s unpredictably irresolute trend.
The public float represents a part of a corporation’s share, which is owned by public investors.
Teresita Herbosa, SEC Chairperson, stated that implementation of a higher public float at 15 percent is being planned by the corporate regulatory for 2017’s new initial public offerings (IPOs).
Herbosa added that this change will not affect the previous trading. She claimed that presently, the market’s average public float already ranges between 25 percent and 35 percent.
A gradual increase in the minimum requirement is urged by the commission’s Market and Securities Regulation. This will push through until 25 percent is reached. The commission will first raise by five percent to 15 percent. This raise will increase gradually until 25 percent is reached.
The benchmark Philippine Stock Exchange index (PSEi) ended the year at 6,952.08, which halted the supposed implementation of higher public float minimum in 2015. The standard closed by 3.9 percent lower than its 2014 record.
After the May 10 elections, the index recuperated. However, the market continued to experience downfall due to the upcoming presidential election in United States, the US Federal Reserve’s looming rate hike, and President Duterte’s tirades against its trading partners.
According to Herbosa, this is a step in order to make the country’s capital markets race along its Asian counterparts. In addition, this could encourage investors to commit into the stock market instead of being lured to scams.
Thailand, Singapore, and Hong Kong have a minimum float requirement of 25 percent from their previous standard of 10 percent.