Question & AnswerQ&A (SEC)
The 20% Rule refers to the limit on the industry ownership of PSE shares by brokers and dealers as a business industry. A broker dealer is prohibited from buying PSE shares for its own account or for the principal account of another broker dealer until this limit is complied with, and a moratorium is imposed when the benchmark is breached.
Related persons include the broker dealer's subsidiaries and affiliates, its directors, officers, principal stockholders, nominees to the PSE, as well as their spouses and relatives up to the 4th civil degree by affinity or consanguinity.
The prohibition can be waived with prior authority from the SEC upon proof that the purchaser is not under the control of the broker dealer in terms of voting rights and beneficial ownership.
If broker dealer employees acquire shares using money provided by the broker dealers themselves or they retain control of voting rights and beneficial ownership, the SEC will consider this as circumvention of the prohibition.
A broker dealer must fill in the 'Client Code' field with the customer's Tax Identification Number (TIN) each time it places an order to buy or sell PSE shares. For customers without a TIN, a unique code must be assigned following a specified convention.
The first five characters of the code reflect the first five letters of the person's surname as in the passport (hyphens if fewer than five letters), and the last five characters reflect the first five characters (alphanumerics) of the passport number.
Broker dealers must submit to the SEC daily reports of all PSE share transactions they have effected by 3:00 p.m. on the same day, signed by the Associated Person, in the prescribed format.
They must submit an original signed copy of the daily reports previously submitted during the immediately preceding week by 12:00 noon every Monday.
Broker dealers must file a separate report on such transactions not later than 12:00 noon of the next day after the transaction.
No, broker dealers are prohibited from soliciting and/or receiving discretionary proxies from customers, and customers are prohibited from issuing discretionary proxies in favor of their brokers to prevent undue control over voting rights beyond allowable limits.