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Related Articles:
•The Basic Settlement Process
•How Do You Make Your Money Grow in Stocks
•How to invest in STOCKS?
•The Electronic Board
•The PSE Composite Index (PSEi)
Related Videos:
Choosing a Stockbroker
Stock Transaction Cost
The PSE Trading Process
History of the PSE
Investor Protection
Category: Beginner Posted on: July 17, 2011 by: pseacademy_administrator Comments: 0 Attachments: 0
As a regulator, how does the PSE protect the rights of the investing public?
The PSE and Securities and Exchange Commission (SEC) have put in place several safeguards that promote transparent, fair, and organized buying and selling of stocks where every investor, big or small alike, are protected from fraud, manipulative trading practices, and erring stockbrokers.
Some of the investor protection initiatives of the PSE are, but are not limited to the following:
1. Self-Regulatory Organization Status (SRO) as granted by the SEC in June 1998. As such, the PSE acts as the ‘police’ of the stock market and it is the SRO status that empowers it to formulate marketplace rules, and impose penalties or sanctions to market participants who will not comply with these rules.
2. Customer First Policy
The PSE regularly monitors and audits the operations of stockbrokers. It ensures that business and trading practices of stockbrokers conform with the laws stipulated in the Securities Regulation Code of the Philippines, including the Customer First Policy, whereby stockbrokers’ orders must always surrender priority to their clients.
3. Risk Based Capital Adequacy
The Risk Based Capital Adequacy is a PSE regulation which ensures that stockbrokers have enough capital to cover its exposure to risks. It also ensures that stockbrokers are financially sound or liquid enough to promptly settle claims and other obligations to clients.
4. Disclosure Rules
Since timely and reliable company disclosures are essential components of a fair and efficient market, the PSE also sees to it that listed companies promptly disclose factual and truthful information only.
a. 10-Minute Rule
The PSE requires that material information that which may affect a listed company’s share price positively or negatively, are disclosed within 10 minutes after its occurrence.
b. Selective Disclosure Rule
Disclosures must also be done first to the PSE so that it will cascade information to every investor and general public through its communication channels and not to a selected group of individuals only.
c. Online Disclosure System
All disclosures are transmitted through a sophisticated computer system known as the PSE Online Disclosure System or ODiSy. Non-compliance or violations of listed companies to PSE Disclosure Rules are heavily penalized with fines, suspension, or even delisting from the PSE.
5. Advanced Warning and Control System (AWACS)
To further enhance investor confidence, the PSE monitors the local stock market through a world-class and sophisticated surveillance system called the Advanced Warning and Control System (AWACS).
AWACS is equipped with the critical elements of surveillance process and provides a robust monitoring and warning mechanism. It monitors and detects unusual stock price or volume movements possibly brought about by insider trading and other manipulative trading practices.
6. Market Integrity Board
The PSE created an independent body known as the Market Integrity Board that oversees stockbrokers’ compliance with the rules governing market transactions. This Board also oversees the Market Regulation Department and is different from the PSE Board and reports directly to SEC.
7. Securities Investor Protection Fund (SIPF)
Another tool created for the protection of investors is the Securities Investors Protection Fund, Inc. or SIPF. The SIPF, which is comparable to the Philippine Deposit Insurance Corp. providing insurance for bank deposits, seeks to build and enhance investors’ confidence in the market and is envisioned to protect the investing public from extraordinary losses, other than the ordinary market fluctuations, arising as a result of fraud, failure of business, or judicial insolvency of PSE-accredited stockbrokers.
Protection to investors is automatic upon the opening of an account with a PSE-accredited stockbroker and given by way of compensation for trade-related obligations of stockbrokers to its customers.
These safeguards, along with other investor protection initiatives of the PSE, serve to protect the health of the equities market and the integrity of capital formation process, making investing in the Philippine stock market secure.
The PSE continues to perform its functions and duties under the law in ensuring that the market operates in an orderly, efficient, and transparent manner, and that investors are properly protected.
Beginner (18)
Intermediate (3)
Advanced (0)
Alternative Investments (3)
All Categories
basic stock investing (18)
alternative investments (3)
market research & development (2)
listings and disclosures (1)
Related Articles:
•The Basic Settlement Process
•How Do You Make Your Money Grow in Stocks
•How to invest in STOCKS?
•The Electronic Board
•The PSE Composite Index (PSEi)
Related Videos:
Choosing a Stockbroker
Stock Transaction Cost
The PSE Trading Process
History of the PSE
Investor Protection
Category: Beginner Posted on: July 17, 2011 by: pseacademy_administrator Comments: 0 Attachments: 0
As a regulator, how does the PSE protect the rights of the investing public?
The PSE and Securities and Exchange Commission (SEC) have put in place several safeguards that promote transparent, fair, and organized buying and selling of stocks where every investor, big or small alike, are protected from fraud, manipulative trading practices, and erring stockbrokers.
Some of the investor protection initiatives of the PSE are, but are not limited to the following:
1. Self-Regulatory Organization Status (SRO) as granted by the SEC in June 1998. As such, the PSE acts as the ‘police’ of the stock market and it is the SRO status that empowers it to formulate marketplace rules, and impose penalties or sanctions to market participants who will not comply with these rules.
2. Customer First Policy
The PSE regularly monitors and audits the operations of stockbrokers. It ensures that business and trading practices of stockbrokers conform with the laws stipulated in the Securities Regulation Code of the Philippines, including the Customer First Policy, whereby stockbrokers’ orders must always surrender priority to their clients.
3. Risk Based Capital Adequacy
The Risk Based Capital Adequacy is a PSE regulation which ensures that stockbrokers have enough capital to cover its exposure to risks. It also ensures that stockbrokers are financially sound or liquid enough to promptly settle claims and other obligations to clients.
4. Disclosure Rules
Since timely and reliable company disclosures are essential components of a fair and efficient market, the PSE also sees to it that listed companies promptly disclose factual and truthful information only.
a. 10-Minute Rule
The PSE requires that material information that which may affect a listed company’s share price positively or negatively, are disclosed within 10 minutes after its occurrence.
b. Selective Disclosure Rule
Disclosures must also be done first to the PSE so that it will cascade information to every investor and general public through its communication channels and not to a selected group of individuals only.
c. Online Disclosure System
All disclosures are transmitted through a sophisticated computer system known as the PSE Online Disclosure System or ODiSy. Non-compliance or violations of listed companies to PSE Disclosure Rules are heavily penalized with fines, suspension, or even delisting from the PSE.
5. Advanced Warning and Control System (AWACS)
To further enhance investor confidence, the PSE monitors the local stock market through a world-class and sophisticated surveillance system called the Advanced Warning and Control System (AWACS).
AWACS is equipped with the critical elements of surveillance process and provides a robust monitoring and warning mechanism. It monitors and detects unusual stock price or volume movements possibly brought about by insider trading and other manipulative trading practices.
6. Market Integrity Board
The PSE created an independent body known as the Market Integrity Board that oversees stockbrokers’ compliance with the rules governing market transactions. This Board also oversees the Market Regulation Department and is different from the PSE Board and reports directly to SEC.
7. Securities Investor Protection Fund (SIPF)
Another tool created for the protection of investors is the Securities Investors Protection Fund, Inc. or SIPF. The SIPF, which is comparable to the Philippine Deposit Insurance Corp. providing insurance for bank deposits, seeks to build and enhance investors’ confidence in the market and is envisioned to protect the investing public from extraordinary losses, other than the ordinary market fluctuations, arising as a result of fraud, failure of business, or judicial insolvency of PSE-accredited stockbrokers.
Protection to investors is automatic upon the opening of an account with a PSE-accredited stockbroker and given by way of compensation for trade-related obligations of stockbrokers to its customers.
These safeguards, along with other investor protection initiatives of the PSE, serve to protect the health of the equities market and the integrity of capital formation process, making investing in the Philippine stock market secure.
The PSE continues to perform its functions and duties under the law in ensuring that the market operates in an orderly, efficient, and transparent manner, and that investors are properly protected.
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