38 Questions
What is the term for the application for the registration of securities required to be filed with the Commission?
Registration statement
What type of security is evidenced by electronic or similar records?
Uncertificated security
Who is responsible for guaranteeing the distribution and sale of securities?
Underwriter
Who is required to register with the Commission before engaging in the business of buying or selling securities?
Brokers, dealers, salesmen, and associated persons
Who is considered an associated person of a broker or dealer?
An employee with supervisory authority
Who can conditionally or unconditionally exempt certain brokers, dealers, salesmen, or associated persons from registration?
The Commission
What is the role of a clearing agency in securities transactions?
To act as a middleman in making deliveries upon payment
What is the consequence of not registering as a broker, dealer, salesman, or associated person with the Commission?
The person will not be allowed to engage in the business of buying or selling securities
What is an exchange?
An organized marketplace or facility that brings together buyers and sellers
What is the condition for the Securities and Exchange Commission to approve foreign equity applications in Investment Houses?
The same or similar rights are enjoyed by Philippine nationals in the applicant's country
What is the limitation on foreign nationals in Investment Houses?
They can only be members of the board of directors to the extent of the foreign participation in the equity
Who is considered an insider?
A person who has access to material information about the issuer
What is the role of a promoter?
To take initiative in founding and organizing the business or enterprise of the issuer
What is prohibited by Section 6, except as authorized by the Monetary Board?
Concurrently being a director or officer of a bank and an Investment House
What is a prospectus?
A document made by or on behalf of an issuer to sell or offer securities for sale
In what circumstance can a person be authorized to be concurrently an officer of an Investment House and of a bank?
When the majority or all of the equity of the Investment House is owned by the bank
What is the primary function of the Philippine Stock Exchange (PSE)?
To facilitate the sale and purchase of shares of stock
Who is not considered an associated person of a broker or dealer?
A person with solely clerical or ministerial functions
What is the name of the corporation that operates the organized secondary market for the trading of fixed income securities?
Philippine Dealing and Exchange Corporation (PDEx)
What is not allowed for Investment Houses?
Engaging in banking operations
What is one of the additional powers granted to Investment Houses?
Arranging to distribute securities on a guaranteed basis
What is not a characteristic of an insider?
Being a customer of the issuer
What is the status granted to the Philippine Stock Exchange (PSE) and the Philippine Dealing and Exchange Corporation (PDEx) by the SEC?
Self-Regulatory Organization
What is another power granted to Investment Houses?
Participating in a syndicate undertaking to purchase and sell securities
What is the definition of 'securities' according to the Securities Regulation Code?
Shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture
What is an 'issuer' in the context of securities?
The originator, maker, obligor, or creator of the security
What is the purpose of the Securities and Exchange Commission's condition for foreign equity applications?
To ensure Philippine nationals have equal rights in the applicant's country
What is a 'broker' in the context of securities?
A person who buys and sells securities for the account of others
What is a 'dealer' in the context of securities?
A person who buys and sells securities for their own account in the ordinary course of business
What is included in the definition of 'securities' according to the Securities Regulation Code?
All of the above
What is the primary role of a broker?
To facilitate transactions by bringing buyers and sellers together
What is a key feature of online trading facilities offered by brokerage houses?
Investors can directly execute trades on the trading platform
What is a service provided by the research team of brokerage houses?
They provide buy or sell recommendations on stocks
What is the role of a relationship manager in a brokerage house?
To act as an advisor to clients on market transactions
What is a key difference between a dealer and a broker?
A dealer trades for their own portfolio, while a broker does not
What is another asset class that brokerage houses help investors invest in?
Commodities
What is a benefit of brokerage houses conducting investor education programs?
To improve their clients' knowledge about investing in the market
What is another service provided by brokerage houses?
News and other alerts on a continuous basis
Study Notes
Investment Houses
- The Securities and Exchange Commission approves foreign equity applications in Investment Houses only if Philippine nationals enjoy similar rights in the applicant's country.
- Foreign nationals can become members of the board of directors to the extent of foreign participation in the equity of the enterprise.
Prohibitions
- Directors or officers of Investment Houses cannot concurrently be directors or officers of a bank, unless authorized by the Monetary Board.
- No Investment House can engage in banking operations.
Powers of Investment Houses
- Arrange to distribute securities of other corporations and the Government or its instrumentalities on a guaranteed basis.
- Participate in syndicate undertakings to purchase and sell securities on a guaranteed basis.
- Arrange to distribute or participate in syndicate undertakings to purchase and sell securities on a best-efforts basis.
Definitions
- "Registration statement" is the application for the registration of securities required to be filed with the Commission.
- "Salesman" is a natural person employed as such or as an agent by a dealer, issuer, or broker to buy and sell securities.
- "Uncertificated security" is a security evidenced by electronic or similar records.
- "Underwriter" is a person who guarantees on a firm commitment and/or best effort basis the distribution and sale of securities.
Registration of Brokers, Dealers, Salesmen, and Associated Persons
- No person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as such with the Commission.
- Registered brokers or dealers cannot employ unregistered salesmen or associated persons.
- The Commission may exempt brokers, dealers, salesmen, associated persons, or classes of the foregoing from registration.
Brokerage Houses
- Act as intermediaries for clients' transactions on exchanges and buy and sell securities for individuals who have signed up with them as clients.
- Provide research and advice, personalized service, and investment opportunities in other asset classes.
- Conduct investor education programs to improve clients' knowledge about investing in the market.
Dealers vs. Brokers
- A dealer trades for its portfolio, while a broker facilitates transactions by bringing buyers and sellers together.
Exchanges in the Philippines
- The Philippine Stock Exchange (PSE) brings buyers and sellers together and facilitates the sale and purchase of shares of stock.
- The Philippine Dealing and Exchange Corporation (PDEx) operates the organized secondary market for the trading of fixed-income securities.
Securities Regulation Code
- Securities include shares, participation, or interests in a corporation or commercial enterprise, and are evidenced by a certificate, contract, or instrument.
- An issuer is the originator, maker, obligor, or creator of the security.
- A broker is a person engaged in the business of buying and selling securities for the account of others.
- A dealer is a person who buys and sells securities for their own account in the ordinary course of business.
This quiz covers the rules and restrictions related to Investment Houses in the Philippines, including foreign equity applications and board of directors compositions.
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