Choosing a Philippine Stockbroker
Risks in Investing in the Philippine Stock Market
Quality of Client Service and Making Complaints
Basic Information about an Account with a Philippine Stock Brokerage
Making Payments (for resident investors)
Transferring funds (for non-resident investors)
Transaction Costs
Communication Costs
Choosing between Street and Named Certificates
Board Lots
Odd Lots
Over the Counter (OTC) Trading

Deal only with a duly licensed company, i.e. one that is a member of the Philippine Stock Exchange (PSE) and therefore also registered with the Philippine Securities and Exchange Commission. Information on member broker firms is available at the Member Firms section of the official PSE web site.
A recommended stockbrokerage of course would be All AsiaSecurities Management Corp., the stock brokerage company I work for.

Risks in Investing in the Philippine Stock Market

Investing in any stock market involves possible loss of all or part of your investment.
Obviously, if you are a foreigner, you should have gained some experience investing in your country's stock market before even considering investing in the Philippine, or for that matter any other country's, stock market.
You should meet with your account officer, his supervisor or manager, and discuss your investment objectives and goals.

Quality of Client Service and Making Complaints

If you are a foreigner not residing in the Philippines, at least learn how to get in touch directly (by phone, letter, or e-mail) with the persons to whom you can make complaints. (I provide useful names, addresses, and fax/phone numbers below).
Complain quickly and in writing directly to the manager. If you do not find satisfaction, you may address your complaint to the appropriate agencies, i.e. the Phillipine Stock Exchange and the Philippine Securities and Exchange Commission.
Get and keep receipts (official receipts, confirmation slips for buying and selling transactions statements of accounts and stock holdings), as well as copies of messages to and from your broker.

Oftentimes, clients' complaints can be easily and quickly resolved just by changing the account officer. If you have complaints with the way your account officer is handling your account, you can always ask the stockbrokerage company to replace him.
In the Philippines, stock market account officers are largely unsupervised by the brokerage house in so far as client servicing is concerned. Unless some criminal act is involved, the brokerage house keeps a hands-off policy. This is because the client is first and foremost deemed a client of the account officer, and only secondarily a client of the brokerage house. It is common practice for the Philippine account officer to bring his clients with him in the event that he transfers to another brokerage house. This practice understandably makes for a a wide range of quality of service in the same brokerage house.

Here are some useful names and addresses:

• All AsiaSecurities Management Corp.
  7th Floor, All AsiaCapital Center, 105 Paseo de Roxas, Makati City, 1200 Philippines
  Trunk Lines 632-813-0188, 632-818-3211
  • Marketing Group (for concerns relating to account officer's conduct)
    Fax No. 632-817-1832
    
    Jhie Yalong, Asst. Manager (to whom requests for change of account officer may be addressed)
    Ding Halili, Vice-President for Retail Sales
    Don Calderon, President

  • Operations Group (for concerns relating to transaction documentation, stockholdings, and cash balances)
    Direct Line 632-893-3889
    Fax No. 632-848-2279
    
    Myra Abdon, Manager (local 1915)
    Rhea Gayoso, Asst. Manager (local 1916)

• Membership Dept., Philippine Stock Exchange
  PSE Center, Exchange Road, Ortigas Center, Pasig City, Philippines
  Direct Line 632-634-6641 * 632-634-8687
  Trunk Line 632-636-0122 to 632-636-0140 local 800 or 801
  Fax No. 632-636-0806
  WebPage: http://www.pse.com.ph

• Brokers and Exchange Dept., Securities and Exhange Commission
  SEC Bldg., EDSA, San Juan, Philippines
  Trunk Line 632-78-09-31

Basic Information about an Account with a Philippine Stock Brokerage

• Cost to open and maintain an account- There is no cost in opening and/or maintaining an account with a Philippine stock brokerage company
• Minimum account size and commission- To cover their administrative costs Philippine stock brokerages either impose a minimum initial investment, or a minimum value per buy transaction (there may be a minimum value for a sale transaction involving a stock bought from another brokerage), or a minimum commission. Practice varies, so check with your broker or account officer.
• Confirmation of Transactions- Philippine stock brokerages send out confirmation invoices to their clients giving details like what stock issue was transacted, transacted price, charges, and net amounts.
• Statements of Accounts- Philippine stock brokerages send out regularly statements of account to their clients, showing beginning cash balance and stockholdings, transactions for the month, and ending cash balance and stockholdings

Making Payments (for resident investors)

Always make payments in bank checks, never in cash. Make the check payable to:
Broker's Name
FAO of (your name)
Acct# (your account number)

"FAO" means "For Account Of" and in effect informs the stockbrokerage company that the funds should be credited to your name and your account.

Transferring funds (For non-resident investors)

Wire transfer is best, and should be your only option.
Never send cash nor checks via mail (this applies regardless of what country you are in or what country you will be sending mail to).
Contact me for All AsiaSecurities' wire transfer instructions.

Transaction Costs

Transaction costs, as a percentage of the actual value of stocks bought or sold, ranges from below 1% (for large transactions of more than P100,000 or US$2,500) up to more than 5% (for smaller transactions of under P10,000 or US$250).
The transaction costs include the following:

• Broker's Commission of usually 1.5% of traded value. There is however a minimum amount of commission charged by Philippine stockbrokerages, causing the percentage commission to exceed 1.5% for small transactions. On the other hand, the broker's commission is heavily discounted for larger transactions.
• Value added tax of 10% on the broker's commission
• PCD fee of 0.009174% of traded value (PCD, or Phil. Central Depository, handles the computer processing of stocks bought and sold.)
• For buying transaction: Documentary stamps of P1.50 per P200 of total "par value" of stocks bought
• For selling transaction: Sales tax of 0.5% of the value of stocks sold.
• If the certificate is named (i.e. under the client's name):
  • Buying: An additional charge of under P200 per certificate covering transfer and upliftment fee
  • Selling: An additional cancellation fee of P22 per certificate.

Communication Costs

For Philippine residents, there is no charge for communication costs.
On the other hand, non-resident foreign clients are usually charged communication costs such as phone calls, faxes, and courier service. Since their commission structure is peso-based, Philippine stockbrokerages really have no choice in this.

Choosing between Street and Named Certificates

A "named" account means securities bought by the account will have actual, physical pieces of paper (the stock certificates) issued in the client's name.
On the other hand, a "street" account means that the no actual certificate is issued, and a simple computer entry is reflected in the account of the stockbrokerage company with the Philippine Central Depository Corp. (the entity legally authorized in the Philippines to run the scrip-less or paper-less system of stock market trading). The actual stockholdings of the account is maintained in the stockbrokerage's own computer system.
There are several disadvantages for using a named account:

• There is an additional charge of under P200 per buying transaction per stock for a named account.
• Monitoring of stock and cash dividends, rights, etc. becomes the responsibilty of the client (after all since the certificate is in the client's name, the client is the owner of record in the books of the companies whose stocks he has bought).
• Before a named certificate can be sold, the certificate must first be returned to the stockbrokerage company already endorsed (and thus saleable by any person who happens to get hold of it).
• The Philippine stockbrokerage company cannot assume responsibility in case the stock certificate gets lost in transit on the way to the client, or on the way back to the stockbrokerage company. If a certificate gets lost, it takes at least a year for a replacement certificate to be issued, plus incidental legal, advertising (for notices of loss), and other costs, not the least of which are possible opportunity losses.

Board Lots and Price Fluctuations

Shares can be bought and sold in "board lots", the number of shares that can be transacted for each price level of a stock. Prices also change at different fluctuations for each price level.
For example, as can be seen from the table below, a stock with a price of P0.0600 can be bought and sold in lots of 100,000 shares, and its price can move in fluctuations of P0.0025, until the stock reaches a price of P0.1050 when its board lot is reduced to 10,000 shares and its price fluctuation increased to P0.0050.
The board lot that applies for the day is based on the closing price for the previous day. Thus, a stock with a price yesterday of P0.1000 will have a board lot of 100,000 shares, even if today's price reaches and/or exceeds P0.1050. For the said stock's board lot to change, it must close today at a price of, or higher than, P0.1050, in which case the new board lot will apply tomorrow.

Price Range		Minimum Fluctuations	Shares Per Board Lot
From	To
0.0010	0.0024	0.0002	1,000,000
0.0026	0.0050	0.0002	1,000,000
0.0055	0.0100	0.0005	1,000,000
0.0110	0.0250	0.0010	100,000
0.0260	0.0500	0.0010	100,000
0.0525	0.1000	0.0025	100,000
0.1050	0.2500	0.0050	10,000
0.2600	0.5000	0.0100	10,000
0.5100	1.0000	0.0100	10,000
1.0200	2.5000	0.0200	1,000
2.5500	5.0000	0.0500	1,000
5.1000	10.0000	0.1000	1,000
10.2500	25.0000	0.2500	100
25.5000	50.0000	0.5000	100
50.5000	100.0000	0.5000	100
101.0000	250.0000	1.0000	10
252.5000	500.0000	2.5000	10
505.0000	10,000.0000	5.0000	10

Odd Lots

A quantity of shares less than a board lot can be bought and/or sold at the odd-lot board. The volume however is thin, and in general, sellers had to offer their shares at a discount and had to wait for buyers for their odd lot holdings to be sold.

Over the Counter (OTC) Trading

The Philippines does not really have an over-the-counter or OTC market.
There is however a gray market for Initial Public Offerings (IPO), which clients should make use of very, very, very cautiously.