Bankers hit high PDEX rates at House inquiry

By Ruben Hortelano

05/07/2008

The added cost that banks have to pay the Philippine Dealing and Exchange Corp. for services that were onced offered free has puzzled and frustrated Union Bank president and chief operating officer Victor Valdepenas Jr. and has forced House committee on banks and financial intermediaries vice chairman Luis Villafuerte to ask the PDEX, the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission to submit a position paper on the nature and scope of their authority to regulate government securities.

Such were deemed essential in establishing whether all have legal basis for imposing or supporting the questioned impositions, according to Villafuerte.

The legislator from Camarines Sur said on Monday he has plenty more ammunition against PDEX and their regulatory supporters.

Valdepenas told the House committee he and other bankers have strong reasons to resent the PDEX impositions.

“The service used to be free, but now we are compelled to pay for it every step of the way. There are so many fees. But what I cannnot really understand are the sanctions the PDEX impose on us for alleged infractions,” Valdepenas said.

His testimony made him the most senior universal bank official to testify against PDEX in a field previously dared only by the CEOs of thrift banks like Pascual Garcia III of the Philippine Savings Bank or by chamber head Alfredo Yao who also founded the Philippine Business Bank or by BPI Family Savings Bank president Alfonso Salcedo Jr.

Villafuerte said deputy BSP Gov. Nestor Espenilla falsely gave the complaining thrift bank executive false hopes by allegedly telling them it was alright for them to organize themselves into a separate self-regulatory organization (SRO) to compete with PDEX and escape its impositions.

Since the group was legally barred from organizing themselves into an SRO, the alternate solution was for the Money Market Association of the Philippines or MART to apply for the status, Villafuerte said.

He said the BSP was originally opposed to the idea but eventually relented.

Villafuerte had support from Makati legislator Teodoro Locsin Jr. who opposed the broad plan for the PDEX to eventually operate as a foreign exchange platform as well.

Locsin bluntly asked Espenilla if the PDEX charter, with BSP indulgence, would allow the “PDEX gang” to engage in foreign exchange operations as well.

PDEX head Vicente Castillo had to explain that their involvement in forex operations was as platform for the Philippine Dealing System which is a subsidiary engaged in the actual business of trading in foreign exchange.

But nobody forgot that Union Bank’s Valdepenas and colleagues “now pay for something we did not pay before.”

“The character of the government securities dealer has changed because of this element and I don’t appreciate it, this institutional arrangement which the market players find of no value,” according to Valdepenas.

Bankers Association of the Philippines president Ramon Sy defended the delegation of the PDS role as forex trading platform to PDEX as part of the need to pursue a reform program approved years earlier by the board of theBAP, its owners.

Sy the delegation was driven by the need to automate the system and centralize the entire operations to achieve greater efficiency.

He acknowledged some incremental costs were involved but asserted these were very minimal.

“This was a step forward in the need to organize the market and achieve transparency, a system that should not stop with short term foreign exchange but to other products that contribute to capital market development,” Sy said.

But Rep. Villafuerte asserted the PDEX, left to its own devices, should not last a day longer without its impositions having already failed as an exchange entity.

He found it funny that PDEX would insist on operating as an SRO as well when as an exchange it lost money totaling P114 million.

“In the long run the PDEX will survive,” Sy said.

Back to top

For comments about this website:Webmaster@tribune.net.ph
The Daily Tribune © 2006