Module 3: Fundamentals of Securities Regulation

Question 1

______ is a financial instrument that holds some type of monetary value.

• Stocks
• Bonds
• Derivatives (Options, Futures, Forwards)
• Trust Certificates

Answer 1

Security

Question 2

To promote a fair, just and transparent market

Objectives:
* Protect the investors
* Ensure that the markets are fair, efficient and transparent
* Reduce Systemic Risk

Answer 2

Securities Regulation Code - Republic Act 8799

Question 3

In the conduct of business, the registered person shall observe high standards of commercial honor and just and equitable principles of trade.

Answer 3

Ethical Standards Rule (SRC Rule 30.2.1)

Question 4

All communications by registered persons with the public shall be based on principles of fair dealing and good faith and should provide a sound basis for facts; no material fact shall be omitted; no exaggerated, unwarranted or misleading statements or claims.

Answer 4

Rule on Advertisements and Communications with the Public (SRC Rule 24.1)

Question 5

Blanket authority given to broker to transact without requiring additional approval from the client.

Answer 5

Discretionary Account

Question 6

Consent is always needed by the broker to transact on behalf of the client.

Answer 6

Directional Account

Question 7

engaging in a series of transactions in securities that are reported publicly to give the impression of activity or price movement in a security

Answer 7

Painting the tape

Question 8

buying and selling securities at the close of the market in an effort to alter the closing price of the security

Answer 8

Marking the close

Question 9

engaging in transactions where both the buy and sell orders are entered at the same time with the same price and quantity by different but colluding parties

Answer 9

Improper matched orders

Question 10

engaging in buying activity at increasingly higher prices and then selling securities in the market at the higher prices or vice versa (i.e. selling activity at lower prices and then buying at such lower prices)

Answer 10

Hype and dump

Question 11

engaging in transactions in which there is no change in beneficial ownership of a security

Answer 11

Wash sales

Question 12

taking advantage of a shortage of securities in the market by controlling the demand side and exploiting market congestion during such shortages in a way as to create artificial prices

Answer 12

Squeezing the float

Question 13

What are the 3 Requirements of the company to IPO?

Answer 13

1. Publication
2. Registration Statement
3. Prospectus

Question 14

Securities which are intended to be issued in tranches at more than one instance after the RS has been rendered effective by the Commission, may be registered for an offering to be made on a continuous or delayed basis in the future, for a period not exceeding three (3) years from date of the RS under which they are being offered or sold

Answer 14

Shelf Registration