C2 The PSE, SEC, and Trading Platform

The ________________________ is a private, non-profit, and non-stock organization that ensures a fair, efficient, and transparent market for trading securities like stocks, bonds, and options

Philippine Stock Exchange, Inc. (PSE)

In 1942 the __________________ was established. It was the first stock exchange in the Philippines and operated until the 1940.

Manila Stock Exchange (MSE)

What happened to the MSE after World War II?

It was re-established in 1946 to support the country’s economic recovery.

Which stock exchange was established in 1963 to serve the growing financial market?

The Makati Stock Exchange (MkSE).

What important law was enacted in 1992 that reformed the financial sector, including stock exchange operations?

The Securities Regulation Code.

When did the MSE and MkSE merge, and why?

In 1994 – to consolidate and improve the efficiency of the stock market.

When was the Philippine Stock Exchange, Inc. (PSE) officially established?

1998 – after the merger of MSE and MkSE.

What innovation did the PSE introduce in 2001?

Electronic trading system to improve efficiency and accessibility.

What new market index was introduced in 2012?

PSE Composite Index (PSEi).

The 5 Roles of PSE

Capital Formation
Investment Opportunities
Price Discovery
Liquidity
Economic Indicator

The PSE enables companies to raise capital by offering a venue for the public sale of shares.

Capital Formation

This platform offers individuals and institutional investors the chance to participate in publicly traded firms.

Investment Opportunities

The PSE functions as a mechanism for _________, wherein the valuation of a company’s stock is established through the interplay of supply and demand.

Price Discovery

The exchange facilitates the buying and selling of shares for investors, making it convenient and effortless.

Liquidity

The PSE index (PSEi), which monitors the performance of the leading 30 publicly listed enterprises, is frequently utilized as an ______________. It mirrors the attitudes of investors and provides insight into the general state of the Philippine economy.

Economic Indicator

The Philippine _____________is the national regulatory agency overseeing the securities industry in the Philippines.

Securities and Exchange Commission (SEC)

Securities and Exchange Commission (SEC) established under the_____________.

Securities Act of 1936

SEC’s primary mission is:

• to protect investors;

• promote a fair and efficient securities market;

• and ensure the integrity of the capital market

7 FUNCTION OF SEC

1.Regulatory Oversight
2. Licensing and Supervision
3. Rule-Making Authority
4. Market Surveillance and Enforcement
5. Corporate Governance and Disclosure
6. Role in Capital Formation
7. Collaboration on Market Development

ensuring it adheres to the Securities Regulation Code (SRC) of 2000 and prevents market abuses like insider trading and manipulation. This role is crucial for maintaining investor confidence and ensuring the smooth arket functioning of capital markets

Regulatory Oversight

The SEC grants the PSE its license to operate as a securities exchange. This license is contingent upon the PSE meeting the regulatory standards set forth by the SEC. The SEC continuously supervises the PSE's operations to ensure that it maintains these standards.

Licensing and Supervision

PSE Supervision includes

reviewing the PSE's organizational structure, governance practices, and the integrity of its trading systems.

The PSE operates under rules and regulations, including listing requirements, trading procedures, and corporate governance standards, which are reviewed and approved by the SEC.

Rule-Making Authority

The SEC ensures that proposed changes align with market fairness, efficiency, and transparency, and its involvement in rule-making ensures the PSE operates in a manner consistent with national and international standards

Rule-Making Authority

The SEC, in collaboration with the PSE, ____________ to detect and prevent any form of illegal or unethical activities within the exchange. The PSE is required to report suspicious activities and potential violations to the SEC, which then has the authority to investigate and take enforcement actions if necessary. This could include penalties, sanctions, or even the suspension of trading for companies that violate securities laws.

Market Surveillance and Enforcement

The SEC enforces strict disclosure requirements for companies listed on the PSE, requiring them to provide accurate information about financial statements, operational changes, and other factors that could affect stock prices. The SEC ensures the PSE enforces these requirements for market transparency and promotes good corporate governance practices among listed companies, which the PSE must incorporate into its regulations and enforcement mechanisms.

Corporate Governance and Disclosure

By ensuring that the PSE operates transparently and efficiently, the SEC helps to create a conducive environment for companies to raise capital by issuing securities. This, in turn, supports economic growth by enabling businesses to expand and create jobs, while providing investors with opportunities to participate in the economic development of the country.

Role in Capital Formation

The SEC and PSE collaborate on initiatives to develop and modernize Philippine capital markets, including new financial instruments, trading system modernization, and market efficiency reforms. The SEC ensures these developments align with best practices, stability and contributing to market competitiveness in the country

Collaboration on Market Development

6 LWAS THAT GOVERN PSE

This is the principal law governing the securities market in the Philippines. The SRC regulates the issuance, trading, and registration of securities, and it also defines the responsibilities and powers of the SEC in supervising the PSE. The law addresses issues like market manipulation, insider trading, and other forms of securities fraud.

SECURITIES REGULATION CODE (SRC) OF 2000 (REPUBLIC ACT NO. 8799) SEC

This law governs the formation, organization, and regulation of corporations in the Philippines, including those listed on the PSE. It sets out the legal framework for corporate governance, including shareholder rights and the duties of corporate officers and directors.

CORPORATION CODE OF THE PHILIPPINES (BATAS PAMBANSA BLG. 68) SEC

Enacted in 2019, this law updates the Corporation Code and introduces modern corporate governance practices. It impacts PSE-listed companies by strengthening corporate governance standards and increasing transparency and accountability.

REVISED CORPORATION CODE (REPUBLIC ACT NO. 11232)

This law, as amended, is significant for the PSE as it imposes obligations on financial institutions, including the stock exchange, to prevent money laundering and terrorism financing. The PSE must ensure that its members and the companies listed on it comply with AMLA's provisions.

ANTI-MONEY LAUNDERING ACT (AMLA) OF 2001 (REPUBLIC ACT NO. 9160)

Issued by the SEC, this code provides guidelines for good governance practices that publicly listed companies, including those on the PSE, must follow. It aims to promote transparency, accountability, and fairness in corporate management.

CODE OF CORPORATE GOVERNANCE FOR PUBLICLY LISTED COMPANIES 

  This law regulates investment companies in the Philippines, including mutual funds that may be traded on the PSE. It ensures that these companies operate within a framework that protects investors.

INVESTMENT COMPANY ACT (REPUBLIC ACT NO. 2629)

WHAT CAN BE TRADED? Financial Assets like:

Stocks – shares of companies Currencies – forex (e.g.,
USD, EUR, PHP) Commodities – gold, oil, crops
Cryptocurrencies – Bitcoin, Ethereum, etc.
Derivatives – options, futures, contracts

WHAT IS A TRADER & WHY DO THEY TRADE?

Scalper, Swing Trader, Position Trader

• Time Frame: Very short-term (seconds to minutes).

• Strategy: Makes many small trades throughout the day, aiming to profit from tiny price movements.

• Goal: Quick, small gains that add up over time.

• Key Trait: Requires fast decision-making, constant market monitoring, and high discipline.

SCALPER

• Time Frame: Short to medium-term (days to weeks).

• Strategy: Buys and holds securities for several days to capture short-term trends or “swings.”

• Goal: Profit from price fluctuations within a trend (upward or downward).

• Key Trait: More flexible than scalping; requires analysis of technical patterns and market momentum.

SWING TRADER

• Time Frame: Long-term (months to years).

• Strategy: Holds investments for a long duration, often ignoring short-term fluctuations.

• Goal: Profit from major market trends or fundamental growth of companies.

• Key Trait: Patience, reliance on fundamental analysis, and long-term market outlook.

POSITION TRADER

A ___________ is a software system or interface that allows users to buy and sell financial instruments, such as stocks, bonds, commodities, currencies, and derivatives, through financial intermediaries, such as brokers or directly on exchanges

trading platform

4 TYPES OF TRADING PLATFORM

Proprietary Platforms
Third-Party Platforms
Web-Based Platforms
Mobile Trading Apps

Trading platform that is developed and maintained by brokerage firms, these platforms are tailored to the specific services offerings of the firm.

PROPRIETARY PLATFORMS

Independent software companies develop these platforms and offer them to multiple brokers.

THIRD-PARTY PLATFORMS

These platforms operate through a web browser, requiring no software installation.

WEB-BASED PLATFORMS

Designed for smartphones and tablets, these appsprovide a convenient way for users to trade on the go.

MOBILE TRADING APPS

THINGS WE NEED THINGS WE NEED TO KNOW ABOUT TO KNOW ABOUT TRADING TRADIN

• Candle Stick Chart

• Stock Price

• Time Frames

• Indicators

• Trendline tools

• Pattern Tools

• Projection Tools

• How to search an asset