Saturday, October 04, 2008 PSE raises surety bonds for brokers, dealers
AFTER the controversy on stocks involving HK Securities Inc., the Philippine Stock Exchange (PSE) has increased the surety bonds for both the brokers and dealers to protect investors and stakeholders.
Francis Lim, PSE president and chief executive officer, said board of directors of the PSE has unanimously approved the recommendations of its broker-directors to raise the amount of surety bonds from P5 million to P10 million for brokers and P1 million to P2 million for dealers.
"We are pleased that the broker-directors have taken it upon themselves to make a proposal that will significantly ensure investor protection and boost stakeholders' confidence in our stock market," Lim said.
The new rules will be made applicable to all brokers and/or dealers who have deferred compliance with the P100-million minimum unimpaired capital requirement.
Under the existing rules, the amount of the surety bonds required to be filed pursuant to Securities Regulation Code (SRC) rule by brokers and dealers who have elected to defer compliance with the P100 million unimpaired paid up capital requirements is fixed at no less than P5 million for brokers and not less than P1 million for dealers.
Such bonds shall be conditioned upon the faithful compliance with the provisions of the code and rules and regulations adopted by the broker and dealer or of any salesman or associated person while acting for him.
"We are confident that we will get the full support of the Securities and Exchange Commission (SEC) for the approval of this measure because we in the PSE believe that it will safeguard investors' rights," Lim added.
While noting that this new measure if approved would really hurt many brokers, Lim said they are serious in implementing this to safeguard the rights of the investing public.
"Changes like this measure can be painful to our brokers. It would require adjustment and more importantly, an open mind to welcome changes if they are necessary to boost liquidity and renew investors' confidence in our local market," Lim said.
The PSE took over the HK Securities after they have illegally shorted stocks.
Lim said the PSE gave HK Securities owner Rodolfo Cruz to cover for the fund shortfall of US$1.15 million but has failed to issue the amount on the agreed deadline.
The PSE lodged a petition with SEC to take over HK Securities to initiate recovery of its assets and protect the interest of its client.
The PSE's Market Regulation Division (MRD) has ordered the suspension of HK Securities pursuant to SRC Rule 39.1(1)(E) to protect the interest of investors and prevent further commission of violations of the securities law and damage to the capital market caused by HK Securities' collapse. (MSN/Sunnex)
