Securities Regulations Code changes sought

THE Securities and Exchange Commission is proposing amendments to the Securities Regulations Code so that it can obtain full membership in the International Organization for Securities Commissions (IOSCO) and participate in initiatives involving the Asean capital markets.

While the Philippines is a member of the IOSCO, it is not a signatory to the Multilateral Memorandum of Understanding (MMOU), an information sharing requirement which the SEC cannot enter into due to the existence of the Bank Secrecy Law, SEC Chairperson Teresita Herbosa said on Friday.

“With the existence of the Bank Secrecy Law, and our status as non-signatory to the MMOU, the SEC cannot sign off on Asean [Association of Southeast Asian Nations] initiatives involving the capital markets in the region,” Herbosa told an annual forum organized by the Financial Executives Institute of the Philippines.

“Thus, it is not expected that SEC can consistently maintain the integrity of our capital markets nor totally eliminate insider trading, market manipulation, fraudulent representations in financial and non-financial reporting, investment scams and the like,” she added.

“In other words, the Philippines cannot break its domestic barriers to competitiveness in the regional or global financial arena,” she said.

The IOSCO is an international body composed of securities regulators that is recognized at the same lev- el as the Financial Action Task Force against money laundering.

The SEC chief enumerated amendments that the IOSCO requires for a country to be able to sign the MMOU. These include direct access to necessary bank records and information in the conduct of a formal investigation of alleged securities law violations; provision of bank records and information upon request of a foreign securities regulator; allowing the use of bank records and information in administrative, civil, and criminal proceedings; allowing an authorized SEC official to issue subpoenas to directly obtain bank records; obtaining information from officers and employees necessary for the disposition of cases; obtaining documents such as on transactions, investments, financial statements, etc.; and allowing the SEC to compel the taking of a person’s testimony by subpoena subject to sanctions for unjustified refusal.

If such proposed amendments pass, it would benefit investors in the form of better protection, timely detection and prevention of scams, more effective conduct of probes for securities violations, greater participation in regional crossborder financial incentives, and promotion of financial services including money transfers, the SEC chief said.

At present, Philippines along with Cambodia and Myanmar are the only Asean countries who are not signatory to the MMOU.