The Philippine Stock Exchange warned the public from investing in companies that are still in the process of securing a permit to trade in the exchange.
PSE president Ramon S. Monzon said in an advisory potential investor should exercise caution and conduct due diligence on entities planning to become securities brokers with the PSE.
The PSE issued the advisory after receiving information that certain entities were soliciting funds or investments from the public as part of their plan to set up a brokerage firm.
Monzon said there was no guarantee that such companies would become PSE trading participants. The applicant-brokers, he said, would undergo comprehensive assessment by the exchange based on their sustainability and qualifications under applicable laws and regulations.
“Please also note that solicitation of investments by such entities may be considered as a sale or offer of distribution of securities in the Philippines which requires prior registration with the Securities and Exchange Commission under the Securities Regulation Code. Failure to obtain such registration subjects the seller or offeror of the securities to civil and criminal penalties under the law,” the PSE said.
The exchanged also noted that the mandatory requirement for a company applying to be a participant must have a trading right which, with the approval of the local bourse, allows it to gain access and use the PSE facilities.
At the same time, a trading participant must have a minimum unimpaired paid-up capital of P100 million and must be a domestic company composed of stockholders who are all acceptable to the PSE board.
The PSE said it had the right to assess the overall fitness and integrity of the applicant, which include track record and qualifications of shareholders, management, nominee and other officers.
The PSE said its rules on trading participants stated: “the power of admission of any applicant is vested in the PSE Board.”
“The rights, benefits, and obligations of a trading participant shall not be transferred, assigned, sold, acquired or exercised by any person or corporation without the prior approval of the PSE board,” the exchange said.