Transactions Abroad in Philippine Securities

March 16, 1971 CBP MEMORANDUM TO : Authorized Security Dealers SUBJECT : Transactions Abroad in Philippine Securities Pursuant to the provisions of Monetary Board Resolution No. 424 dated March 16, 1971, the following regulations governing transactions abroad in Philippine securities are hereby promulgated: 1. Authorized security dealers are authorized to issue, for and on behalf of the Central Bank, licenses authorizing the sale and export to nonresidents abroad of Philippine securities belonging to residents, which securities are listed and traded in the Manila and Makati Stock Exchanges, and the reinvestment abroad of the proceeds of such sale in Philippine securities belonging to nonresidents, as well as the import into the Philippines of such Philippine securities, subject to the following conditions: a. The sale and export abroad to nonresidents of the Philippine securities and the purchase abroad of the Philippine securities from nonresidents for account of the Philippine resident concerned shall be effected only through the authorized security dealer licensing the transaction and the latter's correspondent broker abroad. b. The proceeds of the sale abroad of the Philippine securities shall be reinvested for account of the resident owner of such securities in Philippine securities belonging to nonresident which are listed and traded in stock exchanges in the United States or in Philippine securities purchased from nonresidents in over the counter transactions in the United States, provided such Philippines securities purchased in over the counter transactions are listed and traded in the Manila and Makati Stock Exchanges. Pending the reinvestment of the proceeds of sale of the Philippine securities, which shall not be later than fifteen (15) days from the date of the sale, such proceeds shall be held by the correspondent broker abroad of the authorized security dealer licensing the transactions, for the account of the said authorized security dealer, and shall not otherwise be disposed of. c. The sale abroad of the Philippines securities for the account of the resident owner shall be for not less than the fair market value of such securities on date of sale, and the purchase abroad of the Philippine securities from nonresidents shall be for not more than the fair market value of the Philippine securities on the date of purchase. d. The proceeds of sale abroad of Philippine securities belonging to residents or so much of such proceeds which are not reinvested abroad in Philippine securities belonging to non-residents within the period of fifteen (15) days mentioned in (b) above, shall be remitted in foreign exchange to the authorized security dealer concerned who shall sell the foreign exchange to an authorized agent of the Central Bank within the period provided by existing regulations and pay/credit the peso proceeds to the resident owner of the Philippine securities sold abroad. e. The Philippine securities purchased from nonresidents for account of residents in accordance with the foregoing shall be repatriated to the Philippines as soon as possible but not later than forty-five (45) days from the date of purchase and shall be transferred in the local registry in the name of the resident concerned. f. Authorized security dealers shall submit to the Foreign Exchange Department of the Central Bank quarterly reports of transactions in Philippine securities licensed and effected by them under the provisions of this memorandum in such form and detail as shall be prescribed by the said Department. 2. The provisions of existing circulars, memoranda, rules and regulations of the Central Bank governing securities transactions in conflict with the provisions of this memorandum are hereby amended accordingly: Provided, That , the authority of authorized security dealers to approve, on behalf of the Central Bank on the prescribed form the sale and transfer to nonresidents of foreign securities, Philippine foreign securities, and Philippine domestic securities owned by residents which are listed in a stock exchange in the Philippines, if payment of the fair market value of the securities is received immediately by the authorized security dealer from the nonresident purchaser in foreign exchange which are sold to an authorized agent of the Central Bank within the period prescribed by the Central Bank regulations, shall continue to be in full force or effect. 3. The responsibility for seeing to it that the foregoing provisions of this memorandum, particularly the requirement of repatriation of Philippines securities purchased abroad from nonresidents and their transfer to the resident concerned, and the remittance of the foreign exchange proceeds of the Philippine securities sold abroad and the conversion of such foreign exchange into pesos for account of the resident concerned, shall devolve on the authorized security dealer concerned. 4. Authorized security dealers or any other person or persons who violate any provision of this memorandum shall be subject to the penal sanctions provided in the Central Bank Act, without prejudice, in the case of authorized security dealers to the cancellation of their authority as authorized security dealers of the Central Bank. 5. This memorandum shall take effect immediately. (SGD.) G. S. LICAROS Governor