Definition of Terms
- ATS: An organization or system providing electronic marketplaces for primary and secondary trading of SEC-registered securities, including innovative and SME-related securities.
- ATS does not govern subscriber conduct beyond trading rules nor discipline subscribers other than exclusion from trading.
- Other definitions include affiliate of subscriber, qualified investor, subscriber, and relevant SEC forms (ATS Forms 1 to 6).
Registration Requirements for ATS
- Applicants must register as broker-dealers under SRC.
- Submission of ATS Form 1 with detailed documents including:
- Acceptance procedures and securities types.
- Trading, disclosure, and business conduct rules.
- Software and hardware system descriptions.
- Custodian and registrar details.
- Board approval, management CVs, agreements, risk disclosure statements, risk control unit, and business plans.
- Publish notice of application filing.
- Provide clearing and settlement procedures and register any separate clearing agency if needed.
- Registration limits trading to approved products; additional requirements may be imposed for investor protection.
Registration Exemption
- Commission may grant exemption from ATS registration after public interest and investor protection evaluation.
Operational Requirements
- Fair access: written standards for granting or denying access; must not unreasonably restrict access or discriminate.
- Certain smaller ATS may be exempt from fair access standards if conditions are met.
- Capacity, integrity, and security requirements include:
- Locating data center in the Philippines.
- Capacity and stress testing, online market monitoring accessible to SEC.
- Disaster recovery and contingency planning.
- Annual independent reviews of controls.
- Full disclosure of available product information.
- Permitting examination, inspection, and investigations by Commission or self-regulatory organizations.
- Procedures to protect confidential trading information.
- Use of "exchange" or its derivatives in name is prohibited.
Securities Registration and Trading Procedures
- Securities offered or traded must be registered with the Commission unless exempt.
- Registration procedures follow existing rules for equity and debt securities.
- ATS must have codified initial offering and secondary trading procedures approved by the Commission.
- Brokers/dealers transacting on ATS must be licensed and comply with customer-first policies.
- Prohibited market practices subject to investigation and sanctions.
Clearing and Settlement
- ATS must submit approved procedures for clearing and settlement.
- Independent custodian and registry institutions required, free from conflicts of interest.
- Securities must be dematerialized and digitized with ownership reflected accordingly.
Reportorial and Record-Keeping Requirements
- Operational Report (ATS Form 2) includes subscriber records, daily trading summaries, and time-sequenced order information.
- Initial, amendment, cessation, and other reports required under specified timelines.
- Records must be preserved at least five years and be readily accessible.
- Corporate governance manual must be prepared and complied with.
- ATS responsible for arrangements ensuring proper tax collection with relevant parties.
Qualified Investors/Traders
- ATS must implement Commission-approved screening to ensure only qualified investors/traders participate.
- Compliance with Know Your Customer rules, Anti-Money Laundering Law, and other laws is mandatory.
Suspension and Revocation of License
- False, misleading, incomplete information or fraudulent ATS operation may result in suspension or revocation.
- Commission may suspend ATS operations pending investigation; hearings conducted within five days.
- Suspension orders are confidential initially unless violated.
- Commission may impose measures to maintain orderly trading or liquidation.
Prohibited Acts
- Operating ATS without Commission authorization is unlawful; transactions entered through such ATS are null and void.
- Establishing ATS offices without registration is prohibited.
- False representation as ATS operator or affiliate and unauthorized receipt of client checks are forbidden.
Fees and Penalties
- Registration and renewal fees set with graduated transaction-based fees.
- Penalties imposed for late or non-filing of reports, late amendments, and violations with escalating fines up to cancellation of registration.
- Penalties do not preclude other SRC provisions.
Other Provisions
- Commission may grant exceptions for meritorious reasons on a case-by-case basis.
- Repeal of inconsistent rules and regulations.
- Effective fifteen days after last publication in two newspapers of general circulation.