Apart from losses which leave some potential investors wary of joining trading, there are also other risks lurking in stock investing. With that, the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange, Inc. (PSE) work hand in hand to establish a set of rules and regulations to achieve and maintain an organized, transparent, and fair marketplace for all investors.
The PSE has set up an organized, transparent, and fair marketplace for all investors effectively using the following safety measures:
1. Self-Regulatory Organization Status
In 1998, the SEC has granted the PSE a permission to become a self-regulatory organization. That said, it has the license to be its regulator, and it has established its own rules and penalties for the betterment of the trading environment for the investing public.
2. Customer First Policy
There is regular monitoring of the PSE stockbrokers to see if everyone has complied with the ruling of the Securities Regulation Code of the Philippines wherein it is stipulated that stockbrokers must surrender their priorities to the stock customer.
3. Risk-based Capital Adequacy
The PSE stipulated the risk-based capital adequacy to ensure that all stockbrokers have the financial capacity to cover expenses in case risks abound in a particular trade.
4. Disclosure Rules
The PSE always emphasizes fair and efficient trading. With that, the stock exchange has implemented the following regulations to ensure that all issuers divulge truthful and factual information:
- 10-minute Rule
The issuer must disclose information that could influence the price of a listed company’s share negatively or positively within 10 minutes of occurrence.
- Selective Disclosure Rule
Companies must approach the PSE first to disclose information that may change the share price. As a result, the stock exchange can set up the necessary action to inform all investors and the public about the occurrence and not just a specific individual or group.
5. Capital Markets Integrity Corporation (CMIC)
The CMIC serves to ensure that the trust of the investing public is not stained by setting a mandate for all market participants to follow and comply with all the regulations stipulated by the PSE and the SEC.
6. Total Market Surveillance (TMS)
The TMS is the surveillance system used by the CMIC to monitor and safeguard the stock exchange against breaching, fraud, and manipulation of the PSE rules and regulations.
Many people are wary of investing in stocks because of the lurking dangers. However, by knowing the rules and regulations implemented by the PSE, one can realize how to make the stock investment work to their advantage.
The PSE specifically created their regulations to make the stock market an organized, transparent, and fair marketplace for all shareholders.
Now that you know how the Philippine Stock Exchange organizes a fair and transparent environment for stock trading and investing, you should be more confident to get started.
We can help you learn how to trade independently and invest profitably in the stock market through our stock market consultancy services. Contact us today.
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