PSE lauds IC for capital market development support

The Philippine Stock Exchange lauded the move of the Insurance Commission (IC) to release guidelines that allow insurance and reinsurance companies and mutual benefit associations (MBA) to invest in Exchange Traded Funds (ETFs) and to engage in Securities Borrowing and Lending (SBL) transactions as lenders.

Recently, the IC released a circular that recognizes ETFs as a product that insurance and reinsurance companies and MBAs can invest in for liquidity and diversification. IC Circular Letter 2014-30 enumerated the guidelines to be observed for ETF investments.

The Commission also issued Circular Letter 2014-31 which allows insurance companies to participate in SBL transactions as lenders. The guidelines provide acceptable collateral that lenders may accept, which include cash, government securities and equity shares listed at the PSE.   

“We are grateful to the Insurance Commission for the immense support they are extending to the capital markets. The participation of the insurance sector in investment products like the ETF or trading mechanisms like the SBL will definitely help increase liquidity in the market.  In addition, lending activities can provide an additional income stream for insurance companies as well,” said PSE President and CEO Hans B. Sicat.

“We hope that this is just the start of more collaborative efforts between the PSE and the Insurance Commission, especially given the critical role of the insurance industry in developing our country’s capital markets,” Mr. Sicat added.

At present, there is one ETF listed at the PSE, the First Metro Philippine Equity ETF (FMETF) which tracks the performance of the 30-stock PSE index. FMETF’s share price is up 15.5 percent year-to-date.