Topic to be Discussed:

 Latest Securities Exchange

 Commonwealth Act no. 83
 Presidential Decree No. 902- A in 1975
 Corporation Code
 Securities Regulation Code
 Investment Company Act
 Investment Houses Law
 Financing Company Act

What is Securities and Exchange Commission (SEC) ?

- The Securities and Exchange Commission (SEC) is a federal administrative agency tasked with monitoring
markets, enforcing securities laws, and developing new regulations.
- Congress established the SEC in the Securities Exchange Act of 1934, which was passed in response to the
market failures that precipitated the Great Depression.
- It is a body of five commissioners, appointed by the President by and with the consent of the Senate. That is,
the SEC is an independent agency with five department heads. Furthermore, so that the SEC would remain
independent and apolitical, Congress requires that no more than three commissioners may be members of
the same political party.

What is the Latest Securities Exchange in the Philippine's

 THE PHILIPPINE Stock Exchange (PSE) is targeting 20 new company listings in 2023, its president said on
Thursday.

 “We (will have) 11 this year, I mean there’s no reason why we cannot target 20 next year,” PSE President
and Chief Executive Officer Ramon S. Monzon said during the Road to IPO virtual event.

 The PSE had a record number of initial public offerings (IPOs) in 1994 when 21 companies made their stock
market debut.

 This year, there have been eight IPOs at the PSE, equaling the total for the entire 2021.

 At least three more companies are expected to conduct IPOs this year. If realized, the PSE will end the year
with double-digit IPOs, the first time since 1997.

Mr. Monzon said he is looking forward to the potential Initial public offering (IPO) of major companies, particularly
payment platforms.
“What I’m hoping to see in 2023 is a big payment platform like GCash and PayMaya,” he said.
Globe Fintech Innovations, Inc., which operates GCash, earlier.
Businesses or companies have become more decisive on new investments or expansion plans, as well as for the
necessary funding/borrowing requirements to finance these, including through IPOs or share sales in the local stock
market.

What is Commonwealth Act no. 83?

  Commonwealth Act No. 83 (October 26,1936),otherwise known as the Securities Act, created the Securities
and Exchange Commission, headed by a Commissioner, for purposes of regulating the sale of securities.

What is Presidential Decree No. 902- A in 1975.

 Presidential Decree No. 902-A (March 11,1976), as amended by Presidential Decrees No.1653, No. 758, and
No. 1799, reorganized the Commission as a collegial body composed of a Chairman and four Associate
Commissioners and provided for SEC’s additional powers and functions, including quasi-judicial powers over
intra-corporate disputes.

What is Corporate Code?

 This Code shall be known as "The Corporation Code of the Philippines”

 A corporation is an artificial being created by operation of law, having the right to succession and the
powers, attributes and properties expressly authorized by law or incident to its existence.
 Corporation as Artificial Being
 The Corporation Code has embodied the accepted concept of a corporation as an "artificial" being.
 A Corporation is given by law with rights, powers and liabilities usually accorded a natural person.

Other Attributes of Corporation

 Aside from a corporation being considered as an artificial being it has other attributes like it is created by
operation of law.
 Created by Operation of Law- A corporation comes into being by authorities of the state.
 Right of Succession - A private corporation may continue regardless of the death, insolvency, incapacity of
any of its directors, officers or employees, and regardless of transfer of shares from one stockholder to
another.
 Power, Attributes and Properties- A corporation, being a mere creature of law, has such powers only as are
expressly, or impliedly conferred upon it by the act of incorporation.

Corporate Nationality
 It is a recognized doctrine of corporate law that a private corporation is a national, citizen, resident, or
inhabitant of the country or state, by or under the laws of which it was created or organized.

3 Identical features of partnership and corporation

1. Partnerships and corporations are organizations composed of an aggregate of individuals;
2. Partnerships and corporations have juridical personalities distinct from that of their respective component
members;
3. Partnerships and corporations can act only through their respective agents.

Advantages of a corporate form of business organization:

1. The capacity to hold property, to contract, to sue and be sued as a legal unit or distinct entity;
2. Exemption of shareholders from individual liability;
3. Continuity of existence in spite of death or change of members

Disadvantages of a corporate form of business organization:

1. The limited liability of the stockholders serves to limit the credit available to the corporation;
 2. The transferability of shares permits the uniting incompatible and conflicting interest in one enterprise;
3. The minority stockholders are usually subservient to the wishes of majority.

Conclusion
 The Corporation Code of the Philippines defines a corporation as an artificial being created by law, with the
right to succession and powers authorized by law.
 A corporation has many attributes, including the power to hold property, continuity of existence, and
centralized management.

What is Securities Regulation Code ?

 The Securities Regulation Code or RA no. 8799 aims to protect the investing public primarily through a
system of disclosure and provide punishment for fraudulent practices.

What is the purpose of Securities Regulation Code?

- The Securities Regulation Code or RA no. 8799 in 2000 provided for SEC reorganization to give greater focus
on the commission’s role in capital market development fostering good corporate governance (CG) and
enhancing investor protection.

Kinds of Securities
 Debt Securities
 Equity Securities
 Derivate Securities
 Hybrid Securities

Why do securities need to be regulated?

 Understanding and complying with security regulation helps businesses avoid litigation with the SEC, state
security commissioners and private parties.
 Failing to comply can even result in criminal liability.

What is Investment Company?

 An investment company is a corporation or trust engaged in the business of investing the pooled capital of
investors in financial securities.

What is the Investment Company Act of 1940?

 The Investment Company Act of 1940 is an act of Congress that regulates the organization of investment
companies and the activities they engage in. It sets standards for the investment company industry.
 The Act was signed into law by President Franklin D. Roosevelt along with the Investment Advisers Act of
1940. Both give the U.S. Securities and Exchange Commission (SEC) power to regulate investment trusts and
investment counselors.

Understanding the Investment Company Act of 1940

 The legislation in the Investment Company Act of 1940 is enforced and regulated by the Securities and
Exchange Commission (SEC).
 The Investment Company Act of 1940 was passed in order to establish and integrate a more stable financial
market regulatory framework following the Stock Market Crash of 1929.
  The Act details rules and regulations that U.S. investment companies must abide by when offering and
maintaining investment product securities. Provisions of the Act address requirements for filings, service
charges, financial disclosures, and the fiduciary duties of investment companies.

The Act also provides regulations for transactions of certain affiliated persons and underwriters;
accounting methodologies; record-keeping requirements; auditing requirements; how securities may be distributed,
redeemed, and repurchased; changes to investment policies; and actions in the event of fraud or breach of fiduciary
duty.
Three types of investment companies:
 Mutual funds/open-end management investment companies
 Unit investment trusts (UITs)
 Closed-end funds/closed-end management investment companies.

What is Investment Houses Law ?

 Any enterprise which engages in the underwriting of securities of other corporations shall be considered an
"Investment House" and shall be subject to the provisions of this Decree and of other pertinent laws.

Who regulates investment houses in the Philippines?

 Investment houses are subject to regulation by the Securities and Exchange Commission. Those with quasi-
banking license are further supervised by the Bangko Sentral ng Pilipinas. Republic Act No.

What is the role played by investment houses in the economy?

 The investment house has the right to return to the issuer any portion left unsold without exposing itself to
liquidity risk. This kind of arrangement is prevalent in the flotation of corporate bonds, more commonly
known as short- and long-term commercial papers
 The distribution function is an area reserved for the local brokerage houses. Investment houses undertake
the primary selling of underwritten securities. However, they rarely complement this with market-making
activities. Once the securities are sold to institutional and individual clients, investment houses move on to
the next origination and underwriting mandate. Brokerage houses are the market-makers and the active
secondary distributors.
 Investment Houses are individuals or organizations that are engaged in investment banking and financing
activity. There are different kinds of investment houses, depending upon the type of financial activities they
choose to involve with. Some of them serve the role of brokerages for shares and stocks, while others act as
short term and long term investors in different businesses and asset classes such as real estate.

What is Financing Company Act?

 Corporation that is primarily organized for the purpose of extending credit facilities to consumers and
industrial, commercial, or agricultural enterprises, either through direct lending or by discounting or
factoring commercial papers or accounts receivable, or by buying and selling contracts, leases, chattel
mortgages, or other evidences of indebtedness, or by financial leasing of movable and immovable property,
under the 1998 Act.
 Banks, investment firms, savings and loan associations, insurance companies, cooperatives, and other
financial institutions organized or operating under other special laws are not considered Financing
Companies.
 This Act shall be known as the "Financing Company Act of 1998."
  Sec. 2. Declaration of Policy. — It is hereby declared to be the policy of the State to regulate and promote
the activities of financing and leasing companies to place their operations on a sound, competitive, stable
and efficient basis as other financial institutions, to recognize and strengthen their critical role in providing
medium and long-term credit for investments in capital goods and equipment especially by small and
medium
Stock Market
- A set of exchanges and other venues where shares of publicly held companies are bought and sold.
- The stock market allows buyers and sellers of securities to meet, interact, and transact. The markets allow
for price discovery for shares of corporations and serve as a barometer for the overall economy. Buyers and
sellers are assured of a fair price, high degree of liquidity, and transparency as market participants compete
in the open market.
- A stock market is a regulated and controlled environment. In the United States, the main regulators include
the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority

How does stock market work?

- Stock markets provide a secure and regulated environment where market participants can transact in shares
and other eligible financial instruments with confidence, with zero to low operational risk. Operating under
the defined rules as stated by the regulator, the stock markets act as primary markets and secondary
markets.
- As a primary market, the stock market allows companies to issue and sell their shares to the public for the
first time through the process of an initial public offering (IPO). This activity helps companies raise necessary
capital from investors.
- A listed company may also offer new, additional shares through other offerings at a later stage, such as
through rights issues or follow-on offerings. They may even buy back or delist their shares.
- Investors will own company shares in the expectation that share value will rise or that they will receive
dividend payments or both.

What Are the Functions of a Stock Market?

- The stock market ensures price transparency, liquidity, price discovery, and fair dealings in trading
activities.
What Is Price Transparency?
- Price transparency typically refers to the extent to which information about the bid prices, ask prices, and
trading quantities for a specific stock is available.
What Is Liquidity?
- Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash
without affecting its market price. The most liquid asset of all is cash itself.
What Is Price Discovery?
- Price discovery is the overall process, whether explicit or inferred, of setting the spot price or the proper
price of an asset, security, commodity, or currency.

Traders on the stock market include market makers, investors, traders, speculators, and hedgers. An investor
may buy stocks and hold them for the long term, while a trader may enter and exit a position within seconds. A
market maker provides necessary liquidity in the market, while a hedger may trade in derivatives.

What Is a Commodity Market?

- A commodity market is a marketplace for buying, selling, and trading raw materials or primary products.
How Commodity Markets Work
- Commodities markets allow producers and consumers of commodity products to gain access to them in a
centralized and liquid marketplace. These market actors can also use commodities derivatives to hedge
future consumption or production. Speculators, investors, and arbitrageurs also play an active role in these
markets.
History of Commodity Markets
- Trading commodities goes back to the dawn of human civilization as tribal clans and newly established
kingdoms would barter and trade with one another for food, supplies, and other items. Trading commodities
indeed predates that of stocks and bonds by many centuries. The rise of empires such as ancient Greece and
Rome can be directly linked to their ability to create complex trading systems and facilitate the exchange of
commodities across vast swaths via routes like the famous Silk Road that linked Europe to the Far East.

Types of Commodity Markets

- Spot markets are also referred to as “physical markets” or “cash markets” where buyers and sellers exchange
physical commodities for immediate delivery.
- Derivatives markets involve forwards, futures, and options.
 
What Is Currency Market?
⮚ The currency market (also known as the foreign exchange market) is a one-stop marketplace where different
currencies can be bought and sold by various participants operating in diverse jurisdictions around the
globe. This market plays a very pivotal role in the conduct of international trade and the financial sector.
How Does Currency Market Work?
⮚ A currency market is a place for trading in the currency where participants belong to various jurisdictions.
Market participants enter the markets with different purposes. Together, they make the market more liquid
and increase its efficiency. In addition, since the currency market timing is on a clock basis, the currency
market provides the international banking system a greater opportunity to handle the current account, and
capital account transactions. As such, these markets are the driving force behind vibrant global economies.
⮚ A live currency market deal with different currencies. These currencies are hugely impacted by fundamental
factors such as the balance of payments formula, expected economic growth rate, fiscal policy by the
government of the country, the autonomy of the Central Bank in the implementation of monetary policy,
and the interest rate environment in general, which makes once currency depreciate or appreciate against
other currencies.

Trading In the Currency Market

⮚ Before trading in this market, it is necessary for a trader to gather enough information and have a clear
understanding of it. However, currency market timing is 24 hours. It comprises two sides. Buy-Side has
buyers of foreign currencies and forwards FX contracts. Sell-side consists of primary dealers in money and
originators of foreign exchange contracts, such as large corporations.
⮚ The price of each currency changes depending on the economic, political, and financial conditions of the
countries. The market is closed from the evening of Friday to the evening of Sunday. Since during trading
hours, the important currencies are mainly traded, they are the ones with the highest trading volumes.

Advantages
⮚ They bring in money liquidity and enable huge trade volumes to happen, which provides ample employment
and profits for various businesses.
 ⮚ They are so colossal that no single entity can impact them, and a seamless flow of information makes the
markets highly efficient.
⮚ It is necessary to make foreign investments as it allows the currency to be converted into local currency for
investment in the business of the country in question.
⮚ It enables the different currencies to be priced concerning other money. A usually stronger currency is
characterized by strengthening the economy.
⮚ The currency market exchange enables multinational corporations that engage in cross-border transactions
to hedge the risk of their future receipts and payments denominated in foreign currencies.

Disadvantages
⮚ They are controlled by the respective governments of the local currency, and central banks of regional
countries engage in forex transactions to affect exchange rates per government policy resulting in violent
exchange rate movements. For instance, the Central Bank of any country can decrease the supply of its local
currency and increase its price in other currencies by selling foreign reserves such as a large amount of gold
and foreign currencies.
⮚ They increase various risks, out of which the most prominent is counterparty risk as the currency market is
international, and the failure of one counterparty can impact many other counterparties.
⮚ Due to the sheer size of currency markets, they are largely unregulated despite any number of measures
being taken by the local government of each country.
⮚ They are high-leverage trades and big institutions. Hedge funds bet heavily in these markets, prone to failure
and closure if their bets blow.

Derivatives Market
• Derivatives are financial contracts, set between two or more parties, that derive their value from an
underlying asset, group of assets, or benchmark.
• A derivative can trade on an exchange or over-the-counter.
• Prices for derivatives derive from fluctuations in the underlying asset.
• Derivatives are usually leveraged instruments, which increases their potential risks and rewards.
• Common derivatives include futures contracts, forwards, options, and swaps.

BOND MARKET
• The bond market broadly describes a marketplace where investors buy debt securities that are brought to
the market by either governmental entities or corporations.
• National governments generally use the proceeds from bonds to finance infrastructural improvements and
pay down debts.
• Companies issue bonds to raise the capital needed to maintain operations, grow their product lines, or open
new locations.
• Bonds are either issued on the primary market, which rolls out new debt, or traded on the secondary market,
in which investors may purchase existing debt via brokers or other third parties.
• Bonds tend to be less volatile and more conservative than stock investments, but they also have lower
expected returns.
FOREX & EQUITY MARKET:
Forex Market
The foreign exchange market, commonly referred to as the Forex or FX is the global marketplace for the trading of
one nation's currency for another.
Forex Market (Foreign Exchange Market) Examples:
• EUR/USD (Euro/US Dollar)
• GBP/USD (British Pound/US Dollar)
• USD/JPY (US Dollar/Japanese Yen)
• AUD/USD (Australian Dollar/US Dollar)

Equity Market
Equity market is a market in which shares of companies are issued and traded, either through exchanges or over-
the-counter markets.
Equity Market Examples:
• New York Stock Exchange (NYSE)
• NASDAQ (National Association of Securities Dealers Automated Quotations)
• London Stock Exchange (LSE)
• Tokyo Stock Exchange (TSE)

INDEX MARKET
Index Market is a market where participants trade in financial products that track the performance of a basket of
securities, such as stocks, bonds, or commodities.
Index Market Examples:
• S&P 500 (Standard & Poor's 500)
• NASDAQ Composite
• Dow Jones Industrial Average (DJIA)
• Nikkei 225

MONEY MARKET
⮚ The money market refers to a financial market where short-term financial instruments are traded, such as
treasury bills, commercial papers, certificates of deposits, and repurchase agreements. It is a market where
borrowers and lenders come together for short-term loans, typically for a period of less than one year. The
money market is considered a safe and low-risk investment since the securities traded in this market have a
high credit rating and are highly liquid.
Examples of money market instruments include:
⮚ Treasury bills
⮚ Commercial papers
⮚ Bankers' acceptances
⮚ Certificates of deposits
⮚ Repurchase agreements
CAPITAL MARKET
⮚ The capital market refers to a financial market where long-term securities are traded, such as stocks, bonds,
and mutual funds. It is a market where businesses and governments can raise capital by selling securities to
investors. The capital market is typically riskier than the money market and has a higher potential for
returns, but with greater volatility.
Examples of capital market instruments include:
⮚ Stocks (equities)
⮚ Corporate bonds
⮚ Government bonds
⮚ Mutual funds
⮚ Exchange-Traded Funds (ETFs)

DEBT MARKET
The debt market, also known as the bond market, refers to a financial market where fixed-income securities are
traded, such as bonds and debentures. It is a market where businesses and governments can raise capital by selling
debt securities to investors. The debt market is considered a low-risk investment, but with a lower potential for
returns compared to the stock market.
Examples of debt market instruments include:
⮚ Corporate bonds
⮚ Government bonds
⮚ Municipal bonds
⮚ Treasury bonds
⮚ Convertible bonds