Investment House Sec Dealers Brokers

• Investment House


  An enterprise which engages in the underwriting of securities of other corporations
• Underwriting


  The act or process of guaranteeing the distribution and sale of securities of any kind issued by another corporation
• Securities


  Written evidences of ownership, interest, or participation, in an enterprise, or written evidences of indebtedness of a person or enterprise
• Organization and registration of Investment Houses

  1. Comply with requirements

  2. Not in conflict with public interest and economic growth

  3. Reasonable assurance of financial prudence
• Citizenship requirements for Investment Houses

  At least 40% of voting stock owned by Philippine citizens
• Prohibitions for Investment Houses
• Powers of Investment Houses

  • Arrange to distribute securities on a guaranteed basis
  • Participate in syndicate to purchase and sell securities
  • Arrange to distribute or participate in syndicate to purchase and sell securities on a best-efforts basis
  • Participate as soliciting dealer or selling group member
  • Promote, sponsor, or assist ventures, projects and programs
  • Act as financial consultant, investment adviser, or broker
  • Act as portfolio manager, and/or financial agent
  • Encourage companies to go public, and initiate and/or promote formation, merger, consolidation, reorganization, expansion or recapitalization of enterprises
  • Undertake or contract for researches, studies and surveys
  • Acquire, own, hold, lease or obtain an interest in real and/or personal property
  • Design pension, profit-sharing and other employee benefits plans
  • Engage in foreign exchange operations
  • Act as trustee of a trust fund or trust property
• Investment Houses can be converted into commercial banks with expanded authority
• Capital requirements for Investment Houses

  Minimum paid-in capital of 300 million pesos
• Investment Houses must submit semi-annual reports to SEC and Central Bank
• Investment Houses can engage in dealer or broker business under the Securities Act without a separate license
• Firm commitment or guaranteed underwriting


  Underwriter guarantees to purchase all securities offered for sale by issuer regardless of whether they can sell them to investors
• Best efforts underwriting


  Underwriters do their best to sell all securities offered by issuer, but aren't obligated to purchase the securities for their own account
• Initial public offering (IPO)


  When a private company sells shares of its stock for the first time to the public and becomes a public company
• Mergers and Acquisitions (M&A)

  The consolidation of companies or their major business assets through financial transactions between companies
• Portfolio


  A collection of financial assets and investment tools that are held by an individual, a financial institution or an investment firm
• Portfolio Manager


  Investment decision-makers who devise and implement investment strategies and processes to meet client goals and constraints, construct and manage portfolios, make decisions on what and when to buy and sell investments
• Soliciting Dealer


  A person or company the interest of which in a rights offering is limited to participating in the solicitation of the exercise of rights by holders of those rights
• Tender Offer


  An active and widespread solicitation by a company or third party to purchase a substantial percentage of the company's securities
• Underwriter Syndicate


  A group of investment banks and broker-dealers formed temporarily to sell new issues of a company's equity or debt to investors
• Investment decision-makers


  Devise and implement investment strategies and processes to meet client goals and constraints, construct and manage portfolios, make decisions on what and when to buy and sell investments
• Tender Offer


  An active and widespread solicitation by a company or third party (often called the "bidder" or "offeror") to purchase a substantial percentage of the company's securities. It often occurs when an investor proposes buying shares from every shareholder of a publicly traded company for a certain price at a certain time
• Underwriter Syndicate


  A group of investment banks and broker-dealers formed temporarily to sell new issues of a company's equity or debt to investors. The reason for an underwriter syndicate is to pool the resources of multiple firms when an issue is too large for one firm to take on
• Securities dealers and brokers play a significant role in the financial industry. They act as intermediary between buyer and seller of securities and help investors to make financial decisions. In addition, they provide research and analysis and advisory services to their clients through seminars and market briefings.
• Securities Dealer


  An individual or financial firm that purchases and sells securities for its own business or account. They often hold many securities at a time to fulfill investor demand and sell their securities at competitive prices. This allows dealers to be market makers, which means they prepare to buy or sell securities and attempt to make a profit on the shares that they hold.
• A dealer is different from a trader. While a dealer buys and sells securities as part of its regular business, a trader buys and sells securities for his or her own account—not on a business basis.
• Securities Broker


  A finance professional who helps clients buy and sell securities while overseeing the progress of their brokerage accounts. When clients wish to purchase or sell their investments, they often pay a small commission fee, or brokerage fee, to the broker who then executes the order. Brokers can also provide investors with research and advice to generate investment plans and strategies.
• Role of Brokers


  • Buying and Selling Stocks
  • Research and Advice
  • Personalized Service
  • Invest in Other Asset Class
• Dealers vs Brokers


  Contrary to a dealer, a broker does not trade for its portfolio but instead facilitates transactions by bringing buyers and sellers together. A broker's primary service is to buy and sell stocks on an exchange for members of the investing public who wish to own part of a company.
• Categories of Securities Dealers and Brokers in the Philippines

  • Philippine Stock Exchange (PSE) members/Trading Participants (TPs)
  • Non-PSE members who are licensed by the SEC who deal only with proprietary shares
  • Government Securities Eligible Dealers (GSEDs)
• Philippine Stock Exchange (PSE)


  Brings buyers and sellers together and facilitates the sale and purchase of shares of stock
• Philippine Dealing and Exchange Corporation (PDEx)


  Operates the organized secondary market for the trading of fixed income securities which include both corporate and government securities
• The SEC granted both exchanges a "Self-Regulatory Organization" status which means that they can create and implement their own rules among their players in the securities market.
• Definitions from Securities Regulation Code

  • Securities
  • Issuer
  • Broker
  • Dealer
  • Associated person of a broker or dealer
  • Clearing Agency
  • Exchange
  • Insider
  • Promoter
  • Prospectus
  • Registration statement
  • Salesman
  • Uncertificated security
  • Underwriter
• No person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as such with the Commission.
• No registered broker or dealer shall employ any salesman or any associated person, and no issuer shall employ any salesman, who is not registered as such with the Commission.
• The Commission shall promulgate rules and regulations prescribing the qualifications for registration of each category of applicant, which shall, among other things, require as a condition for registration that: (a) If a natural person, the applicant satisfactorily passed a written examination as to his proficiency and knowledge in the area of activity for which registration is sought; (b) In the case of a broker or dealer, the applicant satisfies a minimum net capital as prescribed by the Commission, and provide a bond or other security as the Commission may prescribe to secure compliance with the provisions of this Code; and (c) If located outside of the Philippines, the applicant files a written consent to service of process upon the Commission pursuant to Section 65 hereof.
• No broker or dealer shall deal in or otherwise buy or sell, for its own account or for the account of customers, securities listed on an Exchange issued by any corporation where any stockholder, director, associated person or salesman, or authorized clerk of said broker or dealer and all the relatives of the foregoing within the fourth civil degree of consanguinity or affinity, is at the time holding office in said issuer corporation as a director, president, vice-president, manager, treasurer, comptroller, secretary or any office of trust and responsibility, or is a controlling person of the issuer.
• No broker or dealer shall effect any transaction in securities or induce or attempt to induce the purchase or sale of any security except in compliance with such rules and regulations as the Commission shall prescribe to ensure fair and honest dealings in securities and provide financial safeguards and other standards for the operation of brokers and dealers, including the establishment of minimum net capital requirements, the acceptance of custody and use of securities of customers, and the carrying and use of deposits and credit balances of customers.
• Investment Houses


  Enterprises which engage in the underwriting of securities of other corporations