Investment Houses Regulations
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Questions and Answers

What is the term for the application for the registration of securities required to be filed with the Commission?

  • Broker's permit
  • Underwriter's license
  • Registration statement (correct)
  • Salesman registration

    • What type of security is evidenced by electronic or similar records?

  • Bearer security
  • Registered security
  • Certificated security
  • Uncertificated security (correct)

    • Who is responsible for guaranteeing the distribution and sale of securities?

  • Broker
  • Underwriter (correct)
  • Dealer
  • Salesman

    • Who is required to register with the Commission before engaging in the business of buying or selling securities?

    <p>Brokers, dealers, salesmen, and associated persons</p> Signup and view all the answers

    Who is considered an associated person of a broker or dealer?

    <p>An employee with supervisory authority</p> Signup and view all the answers

    Who can conditionally or unconditionally exempt certain brokers, dealers, salesmen, or associated persons from registration?

    <p>The Commission</p> Signup and view all the answers

    What is the role of a clearing agency in securities transactions?

    <p>To act as a middleman in making deliveries upon payment</p> Signup and view all the answers

    What is the consequence of not registering as a broker, dealer, salesman, or associated person with the Commission?

    <p>The person will not be allowed to engage in the business of buying or selling securities</p> Signup and view all the answers

    What is an exchange?

    <p>An organized marketplace or facility that brings together buyers and sellers</p> Signup and view all the answers

    What is the condition for the Securities and Exchange Commission to approve foreign equity applications in Investment Houses?

    <p>The same or similar rights are enjoyed by Philippine nationals in the applicant's country</p> Signup and view all the answers

    What is the limitation on foreign nationals in Investment Houses?

    <p>They can only be members of the board of directors to the extent of the foreign participation in the equity</p> Signup and view all the answers

    Who is considered an insider?

    <p>A person who has access to material information about the issuer</p> Signup and view all the answers

    What is the role of a promoter?

    <p>To take initiative in founding and organizing the business or enterprise of the issuer</p> Signup and view all the answers

    What is prohibited by Section 6, except as authorized by the Monetary Board?

    <p>Concurrently being a director or officer of a bank and an Investment House</p> Signup and view all the answers

    What is a prospectus?

    <p>A document made by or on behalf of an issuer to sell or offer securities for sale</p> Signup and view all the answers

    In what circumstance can a person be authorized to be concurrently an officer of an Investment House and of a bank?

    <p>When the majority or all of the equity of the Investment House is owned by the bank</p> Signup and view all the answers

    What is the primary function of the Philippine Stock Exchange (PSE)?

    <p>To facilitate the sale and purchase of shares of stock</p> Signup and view all the answers

    Who is not considered an associated person of a broker or dealer?

    <p>A person with solely clerical or ministerial functions</p> Signup and view all the answers

    What is the name of the corporation that operates the organized secondary market for the trading of fixed income securities?

    <p>Philippine Dealing and Exchange Corporation (PDEx)</p> Signup and view all the answers

    What is not allowed for Investment Houses?

    <p>Engaging in banking operations</p> Signup and view all the answers

    What is one of the additional powers granted to Investment Houses?

    <p>Arranging to distribute securities on a guaranteed basis</p> Signup and view all the answers

    What is not a characteristic of an insider?

    <p>Being a customer of the issuer</p> Signup and view all the answers

    What is the status granted to the Philippine Stock Exchange (PSE) and the Philippine Dealing and Exchange Corporation (PDEx) by the SEC?

    <p>Self-Regulatory Organization</p> Signup and view all the answers

    What is another power granted to Investment Houses?

    <p>Participating in a syndicate undertaking to purchase and sell securities</p> Signup and view all the answers

    What is the definition of 'securities' according to the Securities Regulation Code?

    <p>Shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture</p> Signup and view all the answers

    What is an 'issuer' in the context of securities?

    <p>The originator, maker, obligor, or creator of the security</p> Signup and view all the answers

    What is the purpose of the Securities and Exchange Commission's condition for foreign equity applications?

    <p>To ensure Philippine nationals have equal rights in the applicant's country</p> Signup and view all the answers

    What is a 'broker' in the context of securities?

    <p>A person who buys and sells securities for the account of others</p> Signup and view all the answers

    What is a 'dealer' in the context of securities?

    <p>A person who buys and sells securities for their own account in the ordinary course of business</p> Signup and view all the answers

    What is included in the definition of 'securities' according to the Securities Regulation Code?

    <p>All of the above</p> Signup and view all the answers

    What is the primary role of a broker?

    <p>To facilitate transactions by bringing buyers and sellers together</p> Signup and view all the answers

    What is a key feature of online trading facilities offered by brokerage houses?

    <p>Investors can directly execute trades on the trading platform</p> Signup and view all the answers

    What is a service provided by the research team of brokerage houses?

    <p>They provide buy or sell recommendations on stocks</p> Signup and view all the answers

    What is the role of a relationship manager in a brokerage house?

    <p>To act as an advisor to clients on market transactions</p> Signup and view all the answers

    What is a key difference between a dealer and a broker?

    <p>A dealer trades for their own portfolio, while a broker does not</p> Signup and view all the answers

    What is another asset class that brokerage houses help investors invest in?

    <p>Commodities</p> Signup and view all the answers

    What is a benefit of brokerage houses conducting investor education programs?

    <p>To improve their clients' knowledge about investing in the market</p> Signup and view all the answers

    What is another service provided by brokerage houses?

    <p>News and other alerts on a continuous basis</p> Signup and view all the answers

    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.

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    Description

    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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