PSE adopts measures to ensure broker ownership limit compliance

The Philippine Stock Exchange Inc. (PSE) has adopted measures to ensure that it will remain compliant with the prescribed ownership limit on its shares.

The Securities Regulation Code (SRC) mandates that no industry or business may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the exchange.

“We intend to observe the prescribed broker ownership limit in PSE by putting in place safeguards that will help us with this goal,” said PSE president and chief executive officer Ramon S. Monzon.

Among the measures in place are real-time broker ownership monitoring through the trading system, updating of customer account information form of clients of stockbrokerage firms, submission of a monthly certification of trading participant’s (TP) related person accounts with corresponding PSE shareholdings, and amending the PSE rules governing trading rights and trading participants.

The exchange configured its trading system to automatically prevent the posting of a buy order for PSE shares from accounts that will push it over the 20 percent threshold, or if it is still below 20 percent but the matching of the buy order will cause broker industry ownership to breach the 20 percent level.

The PSE also requires stock brokerage firms to update their customer account information form to disclose the relationship of clients to other trading participants, i.e., the directors, officers and principal stockholders of other broker dealers.

As prescribed by the Securities and Exchange Commission rules governing the trading of PSE shares, the accounts to be monitored include the accounts of related persons of broker deal- ers, which include their subsidiaries and affiliates, directors, officers, principal stockholders, and nominees to the PSE and the spouses and relatives of the foregoing up to the fourth civil degree of consanguinity or affinity.

The exchange also proposed amendments to the PSE rules governing trading rights and trading participants to enjoin TPs to abide by the SEC rules governing trading of PSE shares.

The rule also comes with penalties of P100,000, P200,000, and P300,000 plus suspension of trading operations for at least five consecutive trading days for the first, second, and third and subsequent offense, respectively.

“While we have identified the appropriate measures to ensure that broker ownership remains below 20 percent, we call on our trading participants to help and support us in ensuring that the legal requirements are strictly observed,” Monzon added. /