Dominguez calls out two online stockbrokers

Finance Secretary Carlos G. Dominguez III has called out two online stock brokerage companies for failure to prepare their systems for real estate investment trust (REIT) trading that affected around half a million small investors.

Dominguez said he is supporting the Securities and Exchange Commission’s (SEC) investigation over the alleged “failure” of COL Financial Group, Inc. and MyTrade of Abacus Securities Corp. to properly coordinate with the Philippine Stock Exchange (PSE) for their REIT trading.

Last week, COL Financial and Abacus Securities apologized to clients who were unable to process orders for shares of Ayala Land-led AREIT, Inc., the country’s first real estate investment trust company that tumbled in its market debut.

COL Financial said the incident was due to “misunderstanding” with the PSE, while Abacus Securities stated it was a “miscoordination involving us, platform provider and regulators.”

Abacus Securities, however, committed to honor the clients rejected orders “at the price it should have been done… we are also willing to take the loss if needed.”

But despite the apology, Dominguez, the government’s chief economic manager, is determined to

look into the issue against the two stockbrokers.

“I have been in contact with the SEC and fully support their investigation on this issue,” Dominguez told reporters in a mobile phone message.

In a separate mobile phone message sent to Dominguez, the SEC said the agency has already issued "Show Cause" orders against the “erring brokers” COL Financial and MyTrade.

According to the SEC, initial investigation appeared that the "failure [is] on the part of the brokers concerned to adequately prepare their systems for trading of REIT shares.”

“We have also already required incident reports from PSE and the Central Securities Depository. We are collating the investor complaints and will take action versus those responsible,” the SEC told Dominguez.

Ismael G. Cruz, Philippine Brokers and Dealers Association president, meanwhile, assured Dominguez that they will leave no stone unturned in looking into the case involving the two stock brokerage companies.

“I have just sent you two notices to the investing public issued by COL Financial and MyTrade of Abacus, who together have around 500,000 retail online investors, informing them of the rejection of all their AREIT orders for the past twodays,” Cruz told Dominguez.

“Sadly this is a black eye for our capital markets, which needs to be thoroughly investigated and dealt with properly. It affects the best interests of the investing public,” he concluded.