Philippine Stocks Exchange

I. HISTORY

The Philippine Stock Exchange (PSE), also known as the Philippine stock exchange incorporated (PSEi) is the national stock exchange of the country, began 85 years ago, on August 8, 1927. It was created from the two stock exchange of the country which are the Manila Stock Exchange or MSE established on August 8, 1927 and Makati Stock Exchange or MkSE established on May 27, 1963. PSE, a member of World Federation of Exchanges or WFE is one of the oldest stock exchange in southeast Asia (1927 up to present).

Manila Stock Exchange is the first Stock Exchange in the Philippines and one of the oldest in the Far East founded by W. Eric Little, Gordon W. Mackay, John J. Russell, Frank W. Wakefield and W.P.G. Elliot – five Manila-based businessmen to stimulate business atmosphere through the increase in trading activity. On the other hand, Makati Stock Exchange was organized by five other businessmen namely Hermenegildo B. Reyes, Bernard Gaberman, Eduardo Ortigas, Aristeo Lat and Miguel Campos which started its operations on November 16, 1965 and was located in Makati, then emerging center for finance. Both stock exchange allied after 30 years since the birth of MkSE on December 23, 1992.

The idea to unite the two exchanges and have it managed by a professional group emerged and was attained when the Philippine Stock Exchange, Inc. was incorporated on July 14, 1992 that was agreed by the leaders of both bourses (MSE and MkSE) to further consolidate logistics and to hasten the development of a more efficient capital market.

On March 4, 1994 the Securities and Exchange Commission granted the Philippine Stock Exchange, Inc. its license to operate as a securities exchange in the country stating that “a unified Stock Exchange is vital in developing a strong capital market and a sustainable economic growth.” It simultaneously cancelled the licenses of the MSE and the MKSE.

In June 1998, the Securities and Exchange Commission (SEC) granted the PSE a “Self-Regulatory Organization” (SRO) status, which meant that the bourse can implement its own rules and establish penalties on erring trading participants (TPs) and listed companies.

In 2001, one year after the enactment of the Securities Regulation Code, the PSE was transformed from a non-profit, non-stock, member-governed organisation into a shareholder-based, revenue-earning corporation headed by a president and a board of directors. The PSE eventually listed its own shares on the exchange (traded under the ticker symbol PSE) by way of introduction on December 15, 2003.

II. INTRODUCTION

The Philippine Stock Exchange is currently the only organized exchange in the Philippines licensed for trading stocks and warrants. Its primary goal is to ensure free and transparent stock market buying and selling. Its importance can also be seen in the light of the entire Asian market since Peso is an important currency traded on the foreign exchange market.

The PSE adopted an online daily disclosure system (ODiSy) to improve the transparency of listed companies and ensure full, fair, timely and accurate disclosure of material information from all listed companies in 2005. The ODiSy provides a 24/7 online system access for the submission of all types of disclosures. Then, on July 26, 2010, the PSE launched its new trading system, PSEtrade, which replaced the MakTrade system which was acquired from the New York Stock Exchange. And on March 3, 2012, the PSE Composite hits 5,000 mark the highest record close.

PSE was cited as having the Most Admired Board of Directors by broadsheet Business Mirror in the recent Asia CEO Awards at the Newport Performing Arts Theatre, Resorts World Manila.

The World Federation of Exchanges recognized the PSE as the world’s top performing market in 2011 for rolling out a new trading system, extending trading hours, implementing multiple regulatory and governance enhancements and raising its international profile among the ASEAN member-countries.

It is headed by Mr. Jose T. Pardo, the chairman and made up of 15 people Board of Directors. The main index for PSE is the PSE composite index or PSEi and it is composed of 30 listed companies as of December 31, 2010. There are also 184 trading participants registered at the PSE of which 132 are active. The Philippine Stock Exchange had 253 listed companies with a total market capitalization of 8.9 trillion pesos or 202 billion US dollar in 2010.

Just recently (Feb. 2012), Philippine stocks mostly lower on heightened euro debt crisis. The Philippine stocks closed mostly lower in thin trading as the continues jitters over the euro debt crisis, heightened by the prospect of Greece defaulting on its maturing obligations, kept investors on the sidelines, as reported by Gma news.

III. OVERVIEW

Philippine Stock Exchange, Inc. defined

The Philippine Stock Exchange, Inc. (PSE or Exchange) is a private non-profit and non-stock organization created to provide and maintain a fair, efficient, transparent and orderly market for the purchase and sale of securities such as stocks, warrants, bonds, options and others.

Role of the PSE

The PSE bring together companies which aim to raise capital through the issue of new securities and it also facilitates the selling and buying of the issued stocks and warrants. It provides a suitable market for the trading of securities to individuals and organizations seeking to invest their saving or excess funds through the purchase of securities.

PSE’s Functions

A. Protecting the interest of the investing public
B. Developing and maintaining an efficient, fair, orderly and transparent market.
Efficient. Means that orders are executed and transactions are settled in the fastest possible way. Some reforms have been instituted or are being carried out by the PSE to make the market more efficient, such as: · installation of fully automated trading system; · installation of computer trading terminals in cities outside Metro Manila to encourage the entry of investors; and creation of a central cleaning and depository system to mobilized stock certificates and allow transfer of shares and funds by book entry.

Fair. Means that the PSE assures that no investor will have an undue advantage over another, market player in trading by manipulating prices and engaging into insider trading. Insider trading is the act of buying or selling a particular stock based on certain privileged information which is not available to the public as such it is considered as illegal and prohibited by the PSE.

Market Transparency. Transparency proceeds from the assumption that the investor can only make informed and intelligent information about the particular sock he wants to buy. Such information would include stock price information, corporate conditions and developments.

How is the PSE managed?

One of the non-broker members heads the Exchange, appointed by the Board as the President and Chief Executive Officer (CEO). The President, along with the professional management of the PSE, executes the policy determinations of the Board and ensures that the Exchange is operating efficiently. It carries out for the members, listed companies and exchange system to ensure that stock market operation in the Philippines is kept within the standards of fairness, transparency, professionalism, trust and integrity. Additionally, it sets the rules and regulations of the Exchange, monitors its implementation and ensures that the investing public is given protection in the transaction of their investments. The Exchange also ensures that all legal requirements under the Corporation Code and the Revised Securities Act are met.

PSE Organizational Functions

The functional responsibilities of each department are as follows:
Listings and Disclosure Group This group is composed of the following departments: Listing Processing, Legal Advisory and Corporate Disclosure. It processes and evaluates listing applications, conducts legal due diligence, and monitors compliance to continuing listing requirements including disclosure of listed companies. It also coordinates IPO (initial public offering) distribution.

Compliance and Surveillance Group This group acts as the police of the Exchange. It is composed of the Compliance Audit Department, Special Investigation Department, Market Surveillance Department and Legal Section. The group conducts legal audit and review aside from auditing of member-brokers books and operations. It also monitors the member’s compliance to set rules and regulations and enforces appropriate sanctions to violators or erring member-brokers. It takes responsibility in the operation of the surveillance activity, to ascertain that there are no illegal postings and dealings made in any of the issues listed in the Exchange.

Operations/Automated Trading Group Placed under this group are the Computer Operations Unit, Systems Development Unit and Systems Integration and technical Support Unit along with the Trading & Settlement Department, Administration Department and PSE Plaza Operations Department to function as one group. It is considered as one of the most critical responsibility areas in the organization since it handles the operation of the automated trading and clearing and settlement activities for stock operations.

The Automated Trading Group examines and controls the monitoring, logging and analysis of computer system resource utilization; the maintenance of network connections of all workstations at the trading floor and remote offices; managing of database of off-floor installed sites; and the implementation and integration of the different components of the trading and office systems.

On the other hand, the Trading and Settlement Department monitors compliance of member-brokers to the clearing and settlement requirements of the settlement banks and central depository. It coordinates with these agencies and the custodian banks, both local and foreign, any trading discrepancies, irregularities or settlement concerns of the member-brokers and investing public.

The Administration Department and the PSE Plaza Operations Department handles the building maintenance, security and administration as well as the procurement management and utilization of supplies and equipment including the daily administrative requirements of the Exchange. It is also responsible for the daily dissemination of all the listed companies’ corporate announcements along with the foreign quotation report.

Finance and Investment Group The group is responsible for the management of the company’s financial resources. It is composed of the Accounting Department, Treasury Department, Payroll and Budget Section and Investments Monitoring Section which handles the maintenance of book of accounts, preparation of financial statements and budget, management and placement of PSE funds, monitoring of accounts receivables and billing of accounts.

Business Development and Information Group This group is comprised of the following: Product Development Department, Market Development Department, Research and Public Information Department, Corporate communications Department, PSE Training Institute and PSE Rule Book/Task Force Quality Unit.

The Product Development Department is in charge of the expansion, development and packaging of domestic and foreign financial products, equity-related securities, debt-related securities and other forms of securities and derivatives. It coordinates with private businesses, government agencies and associations in the overall development and packaging of the securities, derivatives and trading facilities.

The Market Development Department handles the expansion, development and monitoring of the investor base for both domestic and foreign market on an individual and institutional level. It looks at the PSE trading operation’s presence and positioning in the domestic, regional, and international markets including the expansion and development of market intermediation services and facilities covering secondary, over-the-counter (OTC) and third markets.

The research and Public Information Department is composed of the Research Services Sections, Information and Publications Section and the Public Information and Assistance Center (PIAC). It conceptualizes processes, consolidates and handles multi-media dissemination of statistical and analytical information and studies related to the business requirements of members. It conducts research and provides information support to the expansion and development of the Exchange trading operations and its markets. It also maintains, develops and disseminates information through manual or electronic libraries and documentation. The department produces regular publications – Weekly Report, Monthly Reports, and Fact Book – that provide market users with a review of the market’s performance along with historical and current data on stock trading activities and listed companies. The Department also acts as the liaison of the Exchange through the sharing of data and information with foreign individuals, organizations and institutions.

Under the Research and Public Information Department is PIAC which implement the Exchange’s continual public assistance program by covering information promotion and facilitation along with complaints mediation in the physical center at the principal offices of the PSE. It also manages the operation of the PSE Souvenir Shop.

The Corporate Communications Department manages all forms of media and public relation through press releases, information and educational campaigns. It is in charge of managing and developing business promotional and marketing exposure requirements of the PSE including the production and dissemination of corporate internal bulletin and other forms of information materials.

The PSE Training Institute is responsible for the development of programs/curricula along with providing lectures, trainings and seminars about securities market participants. Aside from in-house seminars, it conducts road shows to investors in the provinces. The Institute also provides logistics support to all training-related activities of the departments in the PSE. In the future, the Institute plans to conduct activities such as the Certified Securities Representative (CSR) seminars and the technical and fundamental analysis seminars in the coordination with other intuitions.

Five volumes of the PSE Rule Book

Corporate Rules
Membership Rules
Listing and Disclosure Rules
Trading and Settlement Rules
Compliance and Surveillance Rules.

Philippine Stock Exchange Listed Companies

The Philippine Stock Exchange listed companies as of 2012 effective last 17th of January, 2012 was composed of 30 companies and they belong to the listed companies of the Philippine Stock Exchange Index ( PSEi);

Alliance Global Group, Inc. (PSE: AGI)
Ayala Corporation (PSE: AC)
Ayala Land (PSE: ALI)
Aboitiz Power Corporation (PSE: AP)
Bank of the Philippine Islands (PSE: BPI)
Banco de Oro Unibank, Inc. (PSE: BDO)
Belle Corporation (PSE: BEL)
Cebu Air (PSE: CEB)
DMCI Holdings Inc (PSE: DMC)
Energy Development Corporation (PSE: EDC)
First Gen Corporation (PSE: FGEN)
Globe Telecom Inc (PSE: GLO)
International Container Terminal Services Inc (PSE: ICT)
JG Summit Holdings (PSE: JGS)

Jollibee Foods Corporation (PSE: JFC)
Manila Electric Company (PSE: MER)
Manila Water Company (PSE: MWC)
Megaworld Corporation (PSE: MEG)
Metro Pacific Investments Corporation (PSE: MPI)
Metropolitan Bank and Trust Company (PSE: MBT)
Philex Mining Corporation (PSE: PX)
Philippine Long Distance Telephone Company (PSE: TEL)
Robinsons Land Corporation (PSE: RLC)
San Miguel Corporation “A” (PSE: SMC)
Semirara Mining Corporation (PSE: SCC)
SM Development Corporation (PSE: SMDC)
SM Investments Corporation (PSE: SM)
SM Prime Holdings (PSE: SMPH)
Universal Robina Corporation (PSE: URC)

Former companies listed of the PHISIX/PSEi have enlisted:

China Banking Corporation (PSE: CHIB]
Digital Telecommunications Philippines (PSE: DGTL)
Ginebra San Miguel (PSE: GSMI)
GMA Network (PSE: GMA7)
Holcim Philippines (PSE: HLCM)
Ionics Corporation (PSE: ION)
Metro Pacific Corporation (PSE: MPC)

Music Semiconductors Corporation (PSE: MUSX)
Petron Corporation (PSE: PCOR)
Philippine National Bank (PSE: PNB)
Pilipino Telephone Corporation (PSE: PLTL)
Philippine Stock Exchange (PSE: PSE)
Rizal Commercial Banking Corporation (PSE: RCB))
San Miguel Corporation (PSE: SMC and SMCB)
Union Bank of the Philippines (PSE: UBP)
Vista Land and Lifescapes, Inc. (PSE: VLL)

The PSE has eight constituent indices:
PSE All Shares Index (ALL)
PSE Composite Index (PSEi)
PSE Financials Index (FIN)
PSE Holding Firms Index (HDG)
PSE Industrial Index (IND)
PSE Mining and Oil Index (M-O)
PSE Property Index (PRO)
PSE Services Index (SVC)

IV. ANALYSIS

The Philippine Stock Exchange with its primary role of ensuring free and transparent stock market buying and selling plays a vital role in the trading activity of the Philippine economy towards countries in trade and transactions since its birth up to present. It plays a vital role in financing of productive enterprise that use the funds for growth expansion of new jobs for the benefit of all sectors and citizens of the Philippines as then would be reciprocated by the benefits that masses and labors would extend in return to the PSE in generating profit and income, and is therefore essential to the growth of the Philippine economy.

At present, not all citizens are informed about the existence and the significant role that the PSE plays in our economy. We are often misled by our interpretations that the Philippines is under the colonization and power of some countries hence debts would not spare our economy, yet, we are wrong. Apparently, debts ensures a relationship or bond that one country has together with other trading participants in order to have a continuous flow of imports and exports because it can never be easy for a country to stand on its own without participating in trade and acquiring an amount of debt. In fact, it is helpful in the sense that citizens would benefit from those. But moreover, the Philippine Stock Exchange must be given facades or must be projected in the minds of citizen for the reason that knowing its activities if not all is essential in understanding the ups and down of the Philippine economy.

The Philippine Stock Exchange does not merely focuses on the short term activity and is not isolated in terms of progress and execution of transaction because it primarily is the center of development not only in the Philippines but in Asia and one important trade participant of the World. It is not selfish when it comes to generation of income and profit and the said participants because it is well distributed. The planning and the organization it has since then up to present is a solid foundation of the progress and development that it acquired recently this year that lifts the life of every Filipino.

In line with the goals and the roles it has in the economy, we could depict the encouragement and opportunities it offers to the general who are willing to participate even not in the wider scope of trade yet simply in the most common buying and selling transactions. It extends the benefits not only to those rich and wealthy businessmen but the entire masses and is concerned primarily on the welfare of the economy and trade.

The success of the Philippine Stock Market and progress is various seen in our present economy, the presence of commercial buildings, banks, investment agencies and different financial institutions which compose the activity of PSE as participants. Greater numbers of opportunities are now offered from the business giants of the economy and the world towards the small businessmen of the economy. From the huge and tallest buildings down to a small “tiyangge”, there is the effect or touch of the activity of trade managed by the PSE organizations.

Therefore, the increase or the rising of trend in the Philippine Stock Exchange results to a better economy of the Philippines do some points that it is the core of development and the façade to which where and when the Philippines must exert more effort and give its attention towards having an increasing economy and generation of income and profit. the volume of its success will be felt by every individual hence, participating in trade even in the simplest buying and selling transaction is a huge help for us to be moving.

V. CONCLUSION

Through the evaluation of the Philippine Stock Market, one thing and word would only be vital for its long-run existence and positive result that we should have and perform, its participation – in terms of trade, in the simplest form of buying and selling, participation in becoming up-to-date with regards to information and data with the Philippine Stock Exchange, and participation towards awareness.

The progress that will be felt in the Philippine Stock Exchange is a prime mover for our economy wherein we had gathered that in every investment and trade that is being conducted and participated – the more participants (primarily those performing well in terms of profit generation) the more it is possible for a fast moving trade and a positive result and effect to the economy of this country.

We would concede to how significant the PSE in protecting the interest of the investing public and in developing and maintaining an efficient, fair, orderly and transparent market. Every citizen is a participant of trade and prospects for opportunities and benefits of the Philippine Stock Exchange, therefore, we must be able to perform our roles to our economy in terms of proper awareness on how should we invest our money that we must think and value as to how and in what way will it help strengthen our economy, even just thinking of the community where we are, is one help and contribution.

We must not be frightened of investing our money in financial institutions because the benefits and the opportunities that every citizen will have and is now having is one piece of that your money that was invested. Proper orientations must be conducted and given to interested businessmen so that they could efficiently determine the factors on how they should run a business, how to start, when and where and even what other activities to participate because it will surely contribute to the present increasing Philippine economy.

We believe that the proper organization, management and performance of functions of the Philippine Stock Exchange would be the greatest way and ease for this unstable economy of our country and would contribute to a solution so that every citizens will be of great minds in terms of investing some amounts of their money, in starting their own business and in understanding the flow and cycle of the economy.

BIBLIOGRAPHY

1. http://www.gmanetwork.com
2. http://investing.businessweek.com
3. http://en.wikipedia.org
4. http://fglinc.tripod.com