OECD calls for SEC, PSE 'joint initiative' to shorten public listing process

The Organisation for Economic Co-operation and Development (OECD) has released policy recommendations to further strengthen the Philippines’ capital market and boost investor confidence in the equities space.

The OECD is an international organization of more than 100 countries worldwide founded to advise governments on delivering “policies for better lives.”

On Wednesday, the international body unveiled its Capital Market Review of the Philippines during an event hosted by the Securities and Exchange Commission (SEC) in Makati City.

The OECD’s review of the Philippine capital market was conducted at the request of the SEC in late 2023 to provide an objective, third-party, and globally-informed perspective of the Philippine capital market.

In a statement, the SEC said that among the key recommendations of the OECD was to strengthen enforcement of existing corporate governance policies to build investor confidence in the Philippine capital market.

The international body further said that one of the barriers in the capital market was the perception that public equity offerings involve a lengthy process, requiring the approval of both the SEC and Philippine Stock Exchange (PSE).

With this, the OECD recommended that both the SEC and PSE “can pursue a joint initiative to shorten the process.”

The international body added that regulators may also commit to a shorter approval period for initial public offerings (IPOs), providing companies with greater certainty and predictability and encouraging more to go public.

The OECD also recommended that the publication of corporate governance reports is a key aspect of maintaining standards of transparency and accountability within companies.

“For the development of the stock exchange, the OECD stressed the potential of around 400 private enterprises to go public, encouraging both the SEC and the Philippine Stock Exchange to strengthen measures that would make listing more attractive to such companies,” the SEC said.

The OECD also took note that the bond market could serve as another vital source of financing for corporations through streamlined registration processes and improved transparency by local credit ratings agencies.

The international body, likewise, highlighted the need to deepen the investor base by relaxing certain measures for institutional investors in order to increase their participation in the market.

“To deliver on the 6.5-8% GDP growth targets for 2024-28 of the Philippine Development Plan (PDP), the country needs to close the large infrastructure investment gap and raise the capital per worker to the level of peer countries,” the OECD report noted.

To achieve this, the Philippines requires a well-functioning capital market to mobilise and allocate resources efficiently in the economy. Moreover, reforms to boost pensions and savings can also work as a conduit for more inclusive growth as set out in the PDP, according to the OECD.

“The SEC welcomes the assessment by the OECD of the market conditions and issues that have shaped our financial system over the years,” said SEC chairperson Emilio Aquino.

“The report serves as a helpful guide for the SEC and affirms some of the priority areas that we have identified in order to bring us at par with our Asian peers. We remain committed to fostering a robust and dynamic capital market, consistent with our goal of becoming one of the best in Southeast Asia,” added Aquino. — RSJ, GMA Integrated News