Recto urges PSE to work with gov’t in transforming PH capital market as vehicle for ordinary Filipinos to be shareholders in nation’s growth

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Finance Secretary Ralph G. Recto has urged the Philippine Stock Exchange (PSE) to work with the government in transforming the country’s capital market as a vehicle for 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 in 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 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 is the only stock exchange in the country, a self-regulatory organization that provides and ensures a fair, efficient, transparent, and orderly market for the buying and selling of securities. It also offers a convenient and efficient venue for raising capital to support the growth of businesses.

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

In particular, the Finance Chief lauded the PSE for its proactive capital-raising activities, as evidenced by its efforts to double the number of initial public offerings this year alongside introducing innovations.

These new and diversified innovations include the development of a framework for short selling in the Philippines, allowing for 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 benefitting large companies but is making it possible for all Filipinos to become investors, actively contributing to capital aggregation,” he emphasized.

For the Department of Finance (DOF)’s part, Secretary Recto vowed to implement capital market reforms that enhance investor protection, corporate governance, shareholder centrality, and broader investor participation.

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

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

The Department is likewise supporting the Capital Market Development Act which will address weaknesses of the current private pension system and in the process vigorously develop a dynamic and diversified domestic capital market.

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

To broaden the local capital market, the Finance Chief said 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 possible public listing.

On top of these initiatives, he assured the public that the Marcos, Jr. administration’s economic team will continue to foster a stronger economy that provides favorable conditions for investment.

Meanwhile, Secretary Recto urged the PSE to embrace the full digitalization of processes across the board to modernize systems and introduce more innovations to expand market capitalization, noting that no modern economy can grow to accommodate all of 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. All our efforts towards modernizing the capital market will lead to better distribution of the nation’s wealth and reduced inequality,” he stressed.

“With this, I look forward to closely working with the PSE in transforming the Philippine capital market as a means for every business and every Filipino to be shareholders in the country’s growth,” Secretary Recto said in closing.