The SRC imposes a cap on ownership by industry to just 20 percent of the PSE’s outstanding capital. Stock brokers are the most adversely affected by this rule since they used to own 100 percent of the PSE. Previous stock sales had diluted brokers to about 50 percent.

In a disclosure yesterday, the PSE said its board has also approved the allotment of one percent of the bourse’s stock for the PSE Group Employee Stock Option Plan also as a step towards complying with the 20 percent industry limit under the SRC.

PSE president Francis Lim said JP Morgan was chosen from five candidates and will have to submit a proposal of how to sell PSE securities with the aim of reducing the interest of stock brokers to 20 percent or less.

Lim said options include the sale of primary shares and even warrants. He added that shares may be sold to both local and foreign investors since there is no danger that the PSE will hit its 40 percent foreign ownership limit.

JP Morgan will have to come up with the proposal soon since this will have to be approved by PSE shareholders during their annual meeting slated for May 17, 2008.

Last year, the PSE had failed to secure the approval of its shareholders to waive their pre-emptive rights which would have made the sale of new shares and the dilution of brokers much easier.

The PSE is rushing to comply with the 20 percent industry ownership limit imposed by the SRC which it should have complied after it was demutalized.

It has received several extensions from the Securities and Exchange Commission, which has again warned that it will slap penalties on the bourse if it again fails to comply this year. In the past, the SEC had even threatened to take over the bourse if it does not comply with the 20 percent ownership cap.