Philippine Securities Broker-Dealer Rules

Brokers or dealers must have reasonable grounds to believe any recommendation is suitable based on a customer's disclosed financial situation and other securities held.
Before executing a transaction for non-institutional customers, brokers must reasonably attempt to obtain information on the customer's financial status, tax status, investment objectives, and any other relevant details.

Brokers or dealers must not give anything of value exceeding P10,000 per individual per year to employees or representatives of another person related to the employer's business.
All payments or gratuities must be recorded and retained for three years.

Fees charged by brokers or dealers for services such as collections, exchanges, appraisals, and custody must be reasonable and non-discriminatory.

Brokers or dealers must establish effective supervisory systems ensuring compliance with securities laws and regulations.
Supervisory systems must include written procedures, designated supervisory officials, documented qualifications, and annual compliance meetings with associated persons.
Firms must notify the Commission or relevant self-regulatory organizations of supervisory personnel assigned.

Transactions on securities exchanges must involve securities registered under the Revised Securities Act and listed on the exchange.

Securities exchanges must impose penalties of at least suspension or expulsion for fictitious sales, bids, or offers.
Members executing wash sales (transactions with no change of ownership) are subject to immediate expulsion.

Brokers or dealers cannot buy or sell securities for their own account if they hold unexecuted customer orders for the same security at better or equal prices.
Exceptions include odd-lot dealers offsetting odd-lot orders or transactions on different delivery terms.

Public communications must adhere to principles of fair dealing and good faith.
Misleading, exaggerated, or unwarranted statements are prohibited.
Communications must not omit material facts or make unjustified promises or forecasts.
Context, audience, and clarity must be considered to avoid misleading impressions.

No broker or dealer shall give anything of value to influence publication affecting security prices, except for clearly distinguished paid advertisements.

Defined as sales of securities not owned or delivered via borrowed securities.
Brokers must verify customers own securities for long sales and mark short sale orders.
Short sales must be executed at specific price conditions to prevent manipulation.
Failure to deliver securities after short sales can lead to penalties.
Mandatory close-out rules require brokers to buy securities for outstanding short sales within 10 business days.
Directors, officers, and principal stockholders are prohibited from short selling their corporation's securities.
Exchanges and the Commission may prohibit short sales to protect investors.
Violations can result in fines and suspension of licenses.

Persons acting in fiduciary roles cannot use ownership information for securities solicitation or provide it to unauthorized persons.

Brokers or dealers and their employees holding office or control in an issuer corporation cannot trade securities of that issuer.
Annual reports on long positions must be submitted to the Commission.
Violations subject to substantial fines and suspension.
Using proxies or dummies to circumvent these restrictions results in joint liability and sanctions.

Brokers or dealers may not give proxy or authorization for customer securities without written consent from the customer.

Brokers dealing for their own account must transact at fair prices considering all circumstances.
Brokers acting as agents must only charge fair commissions.

Brokers or dealers must use due diligence to secure the best available price for securities transactions to customers.

Several outdated rules concerning quotations, suspension of trading, broker fees, and others are rescinded and replaced by the new rules.

These rules take effect fifteen days after publication in two newspapers of general circulation in the Philippines.