Rosel Joy A.
Provido disseminated to the public and the lapse
Short Quiz 2 (Take Home) – Securities
Write your answers in yellow pad paper.
(1) What is insider trading?
Sec. 27.1 of the Securities Regulation
Code (SRC) penalizes insider trading by
providing that “it shall be unlawful for an
insider to sell or buy a security of the issuer,
while in possession of material information
with respect to the issuer or the security
that is not generally available to the
public”
(2) Who are considered insiders?
Section 3.8. of the SRC defines "Insider" as
the following: (a) the issuer; (b) a director
or officer (or any person performing similar
functions) of, or a person controlling the
issuer; gives or gave him access to
material information about the issuer or
the security that is not generally available
to the public; (d) A government
employee, director, or officer of an
exchange, clearing agency and/or self-
regulatory organization who has access to
material information about an issuer or a
security that is not generally available to
the public; or (e) a person who learns such
information by a communication from any
forgoing insiders.
(3) When is information considered
“material nonpublic” in relation to
insider trading?
Section 27.2. of the SRC considers
information as "material nonpublic" if: (a) It
has not been generally disclosed to the
public and would likely affect the market
price of the security after being
of a reasonable time for the market to
absorb the information; or (b) would be
considered by a reasonable person
important under the circumstances in
determining his course of action whether
to buy, sell or hold a security.
(4) What are the regulations of
securities market professionals?
Section 28. Registration of Brokers, Dealers,
Salesmen and Associated Persons. –
28.1. No person shall engage in the
business of buying or selling securities in the
Philippine as a broker or dealer, or act as
a salesman, or an associated person of
any broker or dealer unless registered as
such with the Commission.
28.2. No registered broker or dealer shall
employ any salesman or any associated
person, and no issuer shall employ any
salesman, who is not registered as such
with the Commission.
28.4. The Commission shall promulgate
rules and regulations prescribing the
qualifications for registration of each
category of applicant, which shall,
among other things, require as a condition
for registration that:
(a) If a natural person, the applicant
satisfactorily pass a written examination as
to his proficiency and knowledge in the
area of activity for which registration is
sought;chan robles virtual law library
(b) In the case of a broker or dealer, the
applicant satisfy a minimum net capital as
prescribed by the Commission, and
provide a bond or other security as the
Commission may prescribe to secure
compliance with the provisions of this (8) What are uncertificated securities?
Code; and
Section 3.14 of the SRC defines
(c) If located outside of the Philippines, the “Uncertificated security” as a security
applicant files a written consent to service evidenced by electronic or similar records.
of process upon the Commission pursuant
to Section 65 hereof.

28.5. A broker or dealer may apply for

registration by filing with the Commission a
written application in such form and
containing such information and
documents concerning such broker or
dealer as the Commission by rule shall
prescribe.

(5) What is an exchange?

Section 3.7 of the SRC defines “Exchange”

as an organized marketplace or facility
that brings together buyers and sellers and
executes trades of securities and/or
commodities.

(6) What are self-regulatory

organizations?

A self-regulatory organization (SRO) is an

organization or association registered
under the Securities Regulation Code that
is empowered to make and enforce its
own rules among its members or persons
associated with members.

(7) What is a clearing agency?

Section 3.6 of the SRC defines “Clearing

Agency” as any person who acts as
intermediary in making deliveries upon
payment to effect settlement in securities
transactions.