MANILA - The Philippine Stock Exchange published in its website on Monday a list of erring trading participants, their violations, and corresponding penalties.

The exchange’s Market Regulation Division based the lists on findings from its regulatory audits—both scheduled and spot examinations—of the trading participants’ operations. This is to ensure that the rules of the exchange are being observed.

While the PSE is a self-regulated organization, the Securities and Exchange Commission (SEC) oversees it. The SEC gave blessings to the website publication of the lists, which in the past was not a common practice.

SEC Director Jose P. Aquino said in a July 21 letter to the PSE that the publication “is in accord to our objective to provide timely information to the public rather than waiting for completion of the audit of all trading participants included in the annual regulatory examination.”

Simple to serious

The audit findings ranged from simple to serious offenses.

Administrative errors included failure to time-stamp order tickets and send monthly statement of accounts to customers. Others purchased PSE shares through affiliated persons or maintained joint accounts with relatives. The exchange has explicit rules on trading participants being involved in transactions that are made for family members or affiliates.

One broker had an officer that maintained an active account with another brokerage firm without a written permission from his or her broker-employer.

Some provided proxy forms (for voting purposes) from and signature cards of clients with different signatures. The brokers were fined P20,000 and asked to secure written authorization from clients before the brokers could vote the shares in behalf of the clients.

The sanctions ranged from P5,000 to P140,000. Some of the audit findings could still be appealed to the SEC, but most are final and executory.

Capital requirement

One of the lists had 6 trading participants where their P50,000 fine is final and executory. They failed to abide by the risk-based capital adequacy ratio for brokers/dealers.

These are:

1. Golden Tower Securities and Holdings, Inc.
2. Public Securities Corp
3. R. Coyiuto Securities, Inc.
4. RTG & Company, Inc.
5. Supreme Stockbrokers, Inc.
6. Westlink Global Equities, Inc.

Each trading participant in the exchange must have an unimpaired capital of P20 million. By December 2010, this will be increased to P30 million.

The biggest penalty was slapped against Westlink Global Equities, Inc.

The PSE’s Market Regulation Division decided on July 6 that Westlink has to pay P140,000 as penalty for engaging in other than that of a broker dealer; and for violating the Exchange’s rules on trading, settlement, compliance and surveillance. It will also be suspended for 15 trading days.

The compliant ones

Of the 66 brokers or dealers who were granted trading rights at the local bourse, only 11 were considered as fully compliant as of August 14.

These are:

1. Asiasec Equities, Inc.
2. BPI Securities Corp
3. Cualoping Securities Corp
4. Globalinks Securities & Stocks, Inc.
5. H.E. Bennett Securities, Inc.
6. Optimum Securities Corporation
7. Philippine Equity Partners Securities, Inc.
8. RCBC Securities, Inc.
9. SB Equities, Inc.
10. Solar Securities, Inc.
11. Tri-State Securities, Inc.