Chapter 8
Securities and exchange commission-
responsible in administering and implementing
such laws as the corporation code
Philippine Stock Exchange- this is where listed
issues are traded.
Broker- a person engaged in business of buying
and selling of securities for the account of
others.
Dealer- any person who buys and sells securities
for his or her own account in the ordinary
course of business.
Material information- information which is
reasonable investor would consider important
in determining whether to buy or sell or hold
securities.
Transfer Agent- any person who engages on
behalf of an issuer of securities.
Member of an Exchange- any broker or dealer
who has the right, pursuant to exchange rules
to trade on that exchange.
Due Diligence- for the protection of the
investing public and in furtherance of the full
disclosure requirements imposed by section 12,
13, 14, 56 and 57.
Corporate Governance- investment houses and
underwriters of securities shall formulate and
submit a corporate governance manual.
Money Laundering Prevention Programs-
investment houses and underwriters of
securities formulate and submit to the
commission their money laundering prevention
programs.
AMLC- anti-money laundering council.
AMLA- anti-money laundering act of 2001
Relationship between Institution and Markets
Issuer- the corporation that causes the
registration of its securities proposed to be
offered to the public in known as the issuer.
Underwriter- under and underwriting
agreement entered into an investment houses
and underwriters of securities and the issuer
corporation with respect to the public
distribution of securities to the latter.
The Regulatory Bodies/Institutions
The Securities and Exchange Commission (SEC)-
pursuant to the provisions of the securities
regulation code, one o the basic functions of
SEC is the regulation and licensing of traditional;
and on-traditional securities as well as the key
participants in the capital markets.
The Philippine Stock Exchange (PSE)- this is
where listed issues are traded. Its principle and
foundation is to hasten and sustain economic
growth for the benefit of the public in general.
Philippine Central Depository (PCD)- this
establishment acts as the custodian of the
securities whereby all securities of a particular
class or series of any issuer deposited within the
system are treated as fungible and may be
transferred.
Securities Clearing Corporation of the
Philippines (SCCP)- acts as the intermediary in
ensuring payments and securities and which
provides the necessary clearing and settlement
facilities.
Banks- unlike pension funds, bank funds that
are available for investment are not cost-free.
Beneficial owner or beneficial ownership- any
person who, directly or indirectly, through any
contract, arrangement, understanding,
relationship or otherwise has shares: voting Options- are contract that give the buyer the
power, which includes the power to vote, or to right, but not the obligation, to buy or sell and
direct the voting of, such security; and/or underlying security at a predetermined price,
investment returns or power, which includes. called the exercise or strike price.

Call options- are rights to buy and put options

are rights to sell.
Material information- information which a
reasonable investor would consider important Warrants- are rights to subscribe or purchase
in determining whether to buy or sell. new shares or existing shares in a company

Control, controlling, controlled by and under

common control with- means the possession,
Definition of Broker/Dealer- any broker and/or
direct or indirect.
dealer registered under section 28 of the code
Member of an exchange- means any broker or to engage in broker and/or dealer activities/
dealer who has the right, pursuant to exchange
rules, to trade on that exchange.
Clearing agency- means any person who
Transfer agent- means any person who engages
provides a facility to a broker/dealer, salesman,
in behalf of an issuer of securities, or itself is an
associated person of a broker/dealer or another
issuer of securities
clearing agency and whose facility.
Public company- means any corporation with a
class of equity securities listed on an exchange.
Facility of an exchange- includes systems ,
Self-regulatory organization or SRO- means any
processes or services, tangible or intangible
organized exchange, registered clearing agency
property, whether or not in a specific physical
and any organization or association registered
location.
as an SRO.

Rules and regulations- refers to all rules and

regulations adopted by the commission Securities and Exchange Commission
pursuant to the code.
a. Market regulation department- responsible
for developing the registration criteria for all
market participants.
Definition of investment contract and
Derivative. b. Corporation Finance department- responsible
for registering securities before they offered for
Investment Contract- a contract, transaction or
sale or sold to the public.
scheme whereby any person invests his money
in a common enterprise.

Derivative- with respect to equity securities,

means a financial instrument, including options
and warrants, whose value depends on the
interest in or performance of an underlying
security.