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RULES AND REGULATIONS


Securities Regulation Code (SRC)
ARTICLE V. CODE OF CONDUCT AND PROFESSIONAL ETHICS
SRC Implementing Rules and FOR TRADERS AND SALESMEN
Regulations

Section 1. General Principles. The following general principles shall guide traders and salesmen
RULES OF THE CAPITAL MARKETS INTEGRITY in their professional and business dealings in the Exchange:
CORPORATION
(a) Traders and salesmen should adhere at all times to the principles of honesty,
ARTICLE I. GENERAL PROVISIONS integrity, fairness and good business practice in the conduct of their business affairs.
ARTICLE II. INVESTIGATION AND
RESOLUTION OF CASES BY CMIC (b) As professionals, traders and salesmen should always strive to gain more
knowledge of the market and to improve their trade skills and know-how.
ARTICLE III. DISPOSITION OF CASES
(c) As responsible persons, traders and salesmen should not buy and/or sell or cause
ARTICLE IV. EMPLOYEES OF TRADING any other person to buy and/or sell any security in relation to which they have acquired
PARTICIPANTS non-public material information that would give them undue advantage vis-à-vis the
ARTICLE V. CODE OF CONDUCT AND general investing public.
PROFESSIONAL ETHICS FOR TRADERS
(d) While traders and salesmen are free to manage their own investments, subject to
AND SALESMEN
the approval of the Associated Person, they shall not hype or otherwise manipulate any
ARTICLE VI. CONDUCT REGULATION OF security to the prejudice of the investing public, their companies and/or the Exchange.
TRADING PARTICIPANTS
(e) A trader or salesman must not enter into any transaction or act in any manner under
ARTICLE VII. CUSTOMER PROTECTION any circumstance which would otherwise adversely affect his duties to the investing
public, his company, the Exchange or the Commission.
ARTICLE VIII. CAPITALIZATION
REQUIREMENTS OF TRADING (f) Traders and salesmen should ensure that the assets of their clients are properly
PARTICIPANTS accounted for and adequately safeguarded.
ARTICLE IX. BOOKS AND RECORDS
RULE Section 2. Relationship of Traders and Salesmen to their Clients. The following principles
shall govern the relationship of traders and salesmen, and their clients:
ARTICLE X. RULES ON SUSPENSION OF
TRADING OPERATIONS (a) Traders and salesmen should always bear in mind that their clients' interest is
paramount at all times and under no circumstance, either by a trader's or salesman's
ARTICLE XI. TRADING IRREGULARITIES
act or omission, shall it be prejudiced.
ARTICLE XII. DISCIPLINARY
GUIDELINES AND SANCTIONS (b) Transactions that may involve conflicts of interest should be avoided, but when they
cannot possibly be avoided, a trader or salesman should ensure that the client's interest
ARTICLE XIII. MISCELLANEOUS is not subordinated to his own and his client is treated fairly before the transaction is
POLICIES executed. Fair treatment includes, but is not limited to, full disclosure to the client of all
material facts related to a transaction involving conflict of interest.

OTHER RULES AND REGULATIONS: (c) Traders and salesmen should exercise due diligence in determining their clients'
PSE Trading Rules financial situation, investment objectives, experience and risk tolerance.

Rules on Establishing and Maintaining (d) Traders and salesmen should exert reasonable efforts to keep their clients
Branches and /or Agencies of Trading wellinformed of relevant market news, disclosures and other developments in a timely
Participants and accurate manner. Corollarily, they must never fabricate information or spread
groundless or false information about a particular security or the market.
PSE Rules on Direct Market Access
(DMA) (e) When providing advice to a client or prospective clients, traders and salesmen must
make full, fair and express disclosure of all matters that could reasonably be expected
to impair their independence and objectivity or interfere with respective duties to their
To get a copy of the Rules and Regulations, please get in clients.
touch with the Secretariat.
These include, but are not limited to, relationships between an issuer and the trader or
salesman, such as directorship or consultancy, investment banking, underwriting or
financial relationships, broker/dealer market-making activities, and material beneficial
ownership of stock.

(f) Traders and salesmen must disclose to their clients or prospective clients any
compensation, consideration, or benefit received from or paid to others for the
recommendation of products or services.

Section 3. Relationship of Traders and Salesmen to their Firm. The following principles
should govern the relationship of traders and salesmen, and their firm:

(a) Traders and salesmen should act and carry themselves in a manner that would
promote and maintain the integrity of their firm, in particular, and the market, in general.

(b) Traders and salesmen should observe all applicable regulatory laws, rules and
regulations, comply with all regulatory requirements and abide by the internal rules of
their firm at all times.
(c) A trader or salesman should be employed by only one Trading Participant at any
given time.

Section 4. Rules on Trading for One's Personal Account. The following rules shall govern a
trader's or salesman's transactions for his own personal account:

(a) The Exchange shall allow traders and salesmen to deal for their own personal
account on condition that they shall not abuse this privilege and that they will not enter
into any transactions that would put their clients at a disadvantage.

(b) To ensure effective monitoring and surveillance, all personal transactions of traders
and salesmen shall be transacted only through their own firm.

(c) A trader or salesman should use and maintain only one (1) personal dealing
account, and only with his firm, which should be registered under his real name.
Additionally, he is prohibited from having, opening or using a solo or joint account with
any person in any other Trading Participant for the purpose of transacting securities.

(d) Traders' and salesmen's personal transactions shall require the prior written
approval of their firm's Associated Person.

(e) The Trading Participant shall trade for its account only under a "Customer First
Policy," and ensure the protection of the public and its clients.

Section 5. Trading Participant Discretion to Prohibit Trading for One's Personal


Accounts. Notwithstanding Section 4 (a) above, a Trading Participant may prohibit their traders or
salesmen from dealing in securities for whatever reason they may see fit. The discretion reserved to
Trading Participants is unqualified and may not be questioned by traders and salesmen.

Section 6. Prohibited Acts. Traders and salesmen are prohibited from:


(a) Combining an order for their own account with client orders for the same security
and handling both proprietary and client accounts.

(b) Entering into any securities transactions in their personal capacity with any client of
their company, unless authorized by the Associated Person.

(c) Commingling the securities of a client with their own securities or commingling their
securities with those of their clients.

(d) Sharing, directly or indirectly, in the profits or losses from trading in an account,
other than their own, carried by the Trading Participant whom they represent or by any
other Trading Participants.

(e) Borrowing money or securities from clients in connection with any transaction in
securities.

(f) Dividing or otherwise splitting commissions, profits or other compensation in


connection with the purchase or sale of securities with any other person not licensed
as a trader or salesman.

(g) For traders and salesmen who have information that a client has placed a buy or
sell order, from buying or selling in the same way, including buy or sell orders made for
discretionary account, until the client's order or decision to buy or sell has been
executed or canceled. However, this prohibition shall not include cases where there is
an expressed order to trade from the client owning the discretionary account.

(h) Taking advantage, directly or indirectly, of any material non-public information


pertaining to a security and/or to a Trading Participant such as, but not limited to,
unpublished research material and/or a firm's shareholdings. Traders and salesmen
shall ensure that no person, including their relatives within the fourth degree of affinity
or consanguinity, shall, directly, take hold of, have access to, or take advantage of such
material non-public information.

(i) When allocating securities traded in the Exchange, from apportioning said securities
among themselves without having first satisfied to the extent possible all client orders.

(j) Undertaking any transaction or engaging in any other work which reduces their
contribution or efficiency in their duties and responsibilities to their company and
clients.

Section 7. Bribery. (a) A trader or salesman shall not accept or solicit an advantage from any
person in connection with his company's business if such act can influence his objectivity in
performing his duties, induce him to act against the interest of his company and clients, or lead to
allegations of impropriety.

(b) A trader or salesman shall not offer an advantage to any person or entity for the
purpose of influencing such person or entity in relation to any business dealings.

Section 8. Confidentiality. Traders and salesmen may come across non-public or confidential
information on listed companies or their clients or employer. Without prejudice to the disclosure and
other requirements of the Securities Laws or other relevant laws, traders and salesmen have a
fiduciary duty in respect of such information and, unless authorized by the relevant parties, shall not
disclose, share or otherwise use the information, especially for their personal gain or benefit.

Section 9. Market Rumors. Traders and salesmen shall not initiate or otherwise participate in
market rumors, which may lead to allegations of price manipulation or insider trading.
Section 10. Gambling. Traders and salesmen shall not engage in excessive gambling of any kind
with persons having business dealings with their company. In social games of chance with clients or
business associates, they must exercise judgment and withdraw from any high stake games.

Section 11.Responsibilities of Trading Participants. Trading Participants shall have the


following responsibilities:

(a) Trading Participants shall ensure that their Associated Person or any person
designated to perform his function ensure that appropriate internal procedures are in
place to implement Section 4 above with respect to traders' and salesmen's trading for
their own account. The written consent of such Officers shall state the following
information:

(i) Any restriction or condition that the concerned Trading Participant may
deem appropriate and necessary to impose;

(ii) The date and time when the consent was given;

(iii) The duration of the validity of such written consent. The written
approval shall be valid until otherwise revoked; and

(iv) The signature of the officer attesting to the truth and accuracy of the
foregoing information.

(b) Trading Participants shall determine whether traders and salesmen shall be allowed
to participate in:

(i) Placements handled by the firm; and

(ii) Initial Public Offerings (IPOs)

(c) Trading Participants shall prepare and maintain the ledgers of traders and salesmen
who deal for their own accounts and those ledgers should be made readily available to
CMIC or the Commission whenever requested. Furthermore, copies of pertinent
supporting documents to traders' or salesmen's transactions such as, but not limited
to, order tickets, confirmation vouchers, in-receipts, outreceipts, credit and debit
memos, corresponding checks as payments for a purchase and as proceeds for a sale,
should be maintained but need not be attached to the ledger. In the case of order
tickets, copies may either be hard copies or any copy in electronic format.

(d) Trading Participants should also establish appropriate procedures, guidelines and
mechanics to monitor and control personal transactions of traders and salesmen to
see to it that the privilege granted to traders and salesmen to trade for their own
accounts is not abused.

(e) Trading Participants should adopt these rules as part of their internal control
system and ensure that the provisions thereof are fully complied with by their traders
and salesmen, and Associated Person.

Section 12. Relationship of Trading Participants with CMIC. Trading Participants and their
directors, officers, employees and duly authorized agents shall exercise utmost professionalism in
dealing with CMIC.

The Trading Participants and their representatives shall be held liable for any unprofessional
behavior or conduct towards any member, employee or duly authorized agent of CMIC, such as but
not limited to the following:

(a) Physical harm or acts that cause or may likely cause mental or emotional suffering,
such as, intimidation, harassment, damage to property, public ridicule, humiliation,
verbal abuse and threats of such acts;

(b) Offer of money or other valuable consideration;

(c) Non-cooperation in providing the required documents and/or information; and

(d) Any other act unbecoming of a securities market professional.

Section 13. Mandatory Compliance with the Provisions. In order to attain the objectives of
the foregoing code of conduct, Trading Participants and all licensed traders and salesmen employed
by Trading Participants are enjoined to strictly observe the provisions thereof.