For Public Comments: SCCP's Application to Operate A Securities Depository

October 16, 2012 PSE MEMORANDUM NO. CN-0055-12 TO : The Investing Public and Market Participants SUBJECT : For Public Comments: SCCP's Application to Operate A Securities Depository This is to invite all concerned parties to submit their comments on the Securities Clearing Corporation of the Philippines ("SCCP")'s proposal to operate a securities depository as well as on the proposed Depository Rules and Operating Procedures. SCCP is proposing a multi-depository framework which will allow several entities to perform depository functions in the same market. However, the Issuer would have to select the depository where all its shares will be lodged since under the SCCP model, a Security can reside in only one depository. Thus, Trading Participants holding securities lodged in different depositories must apply as depository participants of all such depositories. I. Statement of Reasons for and Effect of Proposal SCCP seeks to operate a securities depository under a system that will be integrated with that of its system as a clearinghouse. Under this model, the risk of severe service interruptions attendant to a non-integrated system is significantly minimized. Second, SCCP as a depository aims to enhance operational efficiency by providing end-to-end processing of equities transactions from the Exchange to the clearinghouse to the depository, which is similar to the service currently being offered by the other Exchanges in the region such as the Hong Kong Exchange, Singapore Exchange and Bursa Malaysia. Third, since SCCP will be using its existing infrastructure as a clearinghouse to accommodate its processes as a depository, friction costs chargeable to depository participants for the provision of depository services and other possible value-added services will be offered at reduced rates. Fourth, SCCP seeks to enhance investor protection by operating a depository system that is capable of recording the ownership of shares down to the level of beneficial owners and allow the beneficial owners to access and view their account holdings and any movements thereof through individual access codes provided through the participants. To encourage the investors to avail of this facility, it will be offered free of charge. ASTcEa Towards this end, by virtue of the proposed direct connectivity of Transfer Agents to the SCCP Depository under certain conditions, SCCP will also be able to perform reconciliation of end-of day balances with the Transfer Agents on a daily basis to ensure that the security balances reflected in the records of the SCCP Depository tally with those in the Transfer Agent's books which will also facilitate the easier and faster monitoring of foreign ownership levels. Fifth, the operation of a depository under the umbrella of the Philippine Stock Exchange (the "Exchange") will allow the Exchange to undertake the introduction of new products and services more easily such as in the case of the establishment of a multilateral lending facility for securities borrowing and lending where the SCCP Clearinghouse will act as a central lending agent, should its application with the Securities and Exchange Commission to act as such be approved. Lastly, SCCP aims to offer value-added services to market participants such as "value for value" real time gross settlement of non-Exchange trades through the SCCP Depository's Delivery versus Payment/Receive versus Payment (DVP/RVP) facility, allow real-time book-entry transfer of securities from the depository to the registry at the option of the investor. Furthermore, the competition that would necessarily result from the existence of two or more depositories in a single market will bring significant benefits to the market. Competition will compel each depository to offer depository and depository-related services to participants at a lower cost and encourage each depository to constantly develop and provide value-added services to investors. In sum, the proposal of SCCP to operate a securities depository, if approved, is expected to result in a more efficient market structure with minimal systemic and operational risks. II. Proposed Depository Rules and Depository Operating Procedures In connection with its application to operate a securities depository, SCCP proposes to adopt the SCCP Depository Rules and Depository Operating Procedures which shall govern the provision and use of SCCP's depository service. The full text of the proposed Depository Rules and Depository Operating Procedures are set out in Annexes "A" and "B", respectively. Please send your comments to Ms. Sheryl V. Perillo at [emailprotected] not later than October 29, 2012. HaIESC (SGD.) RACHELLE C. BLANCH Depository Project Manager ANNEX A PROPOSED REVISED DEPOSITORY RULES OF THE SECURITIES CLEARING CORPORATION OF THE PHILIPPINES AS APPROVED BY THE SCCP BOARD OF DIRECTORS October 15, 2012 TABLE OF CONTENTS Rule 1: General Rules Rule 1.1 Definitions Rule 1.2 Interpretation Rule 1.3 Book-Entry System Rule 1.4 Depository Rules and Depository Operating Procedures Rule 1.5 Provision of Services Rule 1.6 Eligible Securities Rule 1.7 Securities Accounts Rule 1.8 Cash Account Rule 1.9 Records Rule 1.10 Notices Rule 1.11 Fees, Fines and Penalties Rule 1.12 Appeal and Arbitration Rule 2: SCCP Participation Rule Rule 2.1 Admission of Participants Rule 2.2 Application Procedure HSDCTA Rule 2.3 Authorized Representatives, Security and Reliance Rule 2.4 Warranties and Representations Rule 2.5 Participant Indemnity and Liability Rule 2.6 Suspension, Termination and Resignation Rule 3: Depository Service Rule 3.1 Depositorv Service Rule 3.2 The Depository Service for Corporate Securities Rule 4: Settlement Service Rules 4.1 Settlement Service Rule 5: Risk Management Rule 5.1 Types of Risks Rule 5.2 Participant Warranty and Indemnity Rule 5.3 Depository Loss Indemnity RULE 1 General Rules Rule 1.1 Definitions. For the purposes of these Depository Rules and the Depository Operating Procedures, and unless the context otherwise requires: "Beneficial Owner" Beneficial owner or beneficial ownership means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: voting power, which includes the power to vote, or to direct the voting of, such security; and/or investment returns or power, which includes the power to dispose of, or to direct, the disposition of such security; provided, however, that a person shall be deemed to have an indirect beneficial ownership interest in any security which is: i. held by members of his immediate family sharing the same household; ii. held by a partnership in which he is a general partner; iii. held by a corporation of which he is a controlling shareholder; or iv. subject to any contract, arrangement or understanding which gives him voting power or investment power with respect to such securities; provided, however, the following persons or institutions shall not be deemed to be beneficial owners of securities held by them for the benefit of third parties or in customer or fiduciary accounts in the ordinary course of business, so long as such shares were acquired by such persons or institutions without the purpose or effect of changing or influencing control of the issuer: HSDaTC (a) A Broker Dealer; (b) An investment house registered under the Investment Houses Law; (c) A bank authorized to operate as such by the Bangko Sentral ng Pilipinas; (d) An insurance company subject to the supervision of the Office of the Insurance Commission; (e) An investment company registered under the Investment Company Act; (f) A pension plan subject to regulation and supervision by the Bureau of Internal Revenue and/or the Office of the Insurance Commission; and (g) A group in which all of the members are persons specified above. All securities of the same class beneficially owned by a person, regardless of the form such beneficial ownership takes, shall be aggregated in calculating the number of shares beneficially owned by such person. A person shall be deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership within thirty (30) days, including, but not limited to, any right to acquire: through the exercise of any option, warrant or right; through the conversion of any security; pursuant to the power to revoke a trust, discretionary account or similar arrangement; or pursuant to automatic termination of a trust, discretionary account or similar arrangement. "Business Day" means a day and the hours during which the Depository is open for business to Participants. "Cash Account" means the account as defined in Rule 1.8. "Cash Element" means the element of a Transaction intended by the parties to be performed by the payment by one party to the other of a specified amount of money. "Certificate" means the physical instrument evidencing ownership of, or any rights in, Securities. TAcSCH "Certificated Securities" mean Securities the legal title to which is evidenced by a Certificate. "Client Sub-account" means a Deposit Sub-account as defined under Rule 1.7.2 (a). "CMIC" means the Capital Market Integrity Corporation. "Commission" or "SEC" means the Securities and Exchange Commission of the Philippines. "Corporate Action" means every action taken by the securities issuer thereby delivering rights to all beneficial owners of Securities of similar type and class such as the rights to receive cash dividend, stock dividend, interest, bonus stock, rights, Warrant or other rights. "Defective Securities" mean Securities, whether or not evidenced by a Certificate, which are counterfeit, invalid, forged, improperly altered, non-negotiable, subject to an adverse claim, not free from any liens, encumbrances, assessments or charges of any kind, subject to any restriction or prohibition on transfer through the Depository System, or otherwise flawed. Defective Securities cannot be credited into the Deposit Account. "Delivery-Versus-Payment" means the Settlement of a Transaction by means of the automatic reciprocal delivery of the Security Element and Cash Element. "Deposit Account" means the account to which a Participant's lodged Securities are credited; from which uplifted or retired Securities are debited; to which Securities entitlements are credited; and to or from which Securities are credited, debited or otherwise marked as a result of a Transaction. EaTCSA "Depository" means the SCCP including, where the context so requires, Depository Nominee and their respective directors, officers, employees, shareholders, agents and assigns. "Depository Operating Procedures" mean the manual describing Depository operations, services, facilities and the use thereof, and setting forth the procedures and prescribing the forms and manner to be followed by Participants and Depository, and including circulars and replacement pages issued to Participants periodically. "Depository Rules" mean these Depository Rules, and includes the Depository Operating Procedures as may be amended, supplemented or modified from time to time. "Depository System" means the system as defined in Rule 1.3. "Eligible Securities" mean an issue of Securities from time to time accepted as eligible by Depository for Security Deposit in the Depository System, and where the context so requires shall include any particular Securities of such an issue. "Exchange" means an organized market place or facility that brings together buyers and sellers and executes trades of Securities. "Exchange Trade" means a transaction on a licensed exchange for the sale or purchase of an Eligible Security which is reported to a clearing agency for Clearing and Settlement. "Free of Payment" means the Settlement of a Transaction with no Cash Element by means of the automatic delivery of the Security Element. "Freeze" means the process in which Depository renders the Securities in a Securities Account of a Participant ineligible for any Transaction. The term "frozen" shall refer to the state of the Securities after a Freeze, while "unfrozen" shall refer to the state of the Securities after the lifting of a Freeze. DTcHaA "Fungible" means that certain Securities are substitutable with other Securities of the same class by mere reference to a quantity of a particular Security without reference to the name of the holder, certificate number or the like. "Instruction" means a directive or authorization given by a Participant through its authorized representative(s) or alternate(s) to SCCP to effect a Transaction in accordance with these Depository Rules and the Depository Operating Procedures in connection with the use and availability of the Depository System. Any such Instruction so issued shall be deemed to have been issued with full power, right, and authority. "Issuer" means the originator, maker or creator of the Security. "Lodgment" or "Security Deposit" means the deposit of Eligible Securities into the Depository System without consideration, rendering the Securities eligible for book-entry Settlement within the Depository System. The terms "lodge", "lodged" and "lodging" when used in these Depository Rules shall refer to the verb or adjective forms of Lodgment, as the context may imply. "Manifest Error" means an error arising from incorrect manual data entry of users to the Depository System. "Omnibus Client Account" means a Deposit Sub-account defined under Rule 1.7.2 (b). "Participant" means a Person whose application to participate in the SCCP Depository has been accepted by the Depository, and who remains or is reinstated as a Participant pursuant to Rule 2. "Participant's Indemnity" means the obligation of a Participant to make indemnifications in accordance with Rule 5.2. "Participantship Agreement" means the form which an applicant must duly accomplish, sign and deliver to Depository to become a Participant in the Depository System. "Payment Date" means the date when entitlements pertaining to lodged Securities are paid to or through the Depository System for distribution to their Beneficial Owners. "Person" means a natural person, or a juridical person, whether private or public, or domestic or foreign. DEacIT "Proprietary Securities Account" means the Securities Account in which the only Securities that may be held are Securities of which the Participant as dealer is the Beneficial Owner. "Proprietary Sub-account" means a Deposit Sub-account defined under Rule 1.7.2 (c). "PSE" means The Philippine Stock Exchange, Inc. "Record Date" means the date when certain rights or entitlements pertaining to Securities accrue. "SCCP" means the Securities Clearing Corporation of the Philippines, and may refer to either the clearing house or Depository agency, or both, as the context may require. "SCCP Board" means the duly elected board of directors of SCCP, including a committee appointed by the board of directors to exercise any of its duties or powers under the Depository Rules. "SCCP Nominee Corp." means the wholly-owned subsidiary of Depository with the single purpose of holding legal title to (but not Beneficial Ownership of) all Securities lodged in the Depository System. "Scripless or Uncertificated Securities" mean Securities, title to which is not required to be evidenced by a Certificate. "Securities" mean shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture listed on an Exchange and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes: (a) Shares of stock, bonds, debentures, notes, evidences of indebtedness, asset-backed securities; (b) Investment contracts, certificates of interest or participation in a profit; (c) Sharing agreement, certificates of deposit for a future subscription; (d) Fractional undivided interests in oil, gas or other mineral rights; (e) Derivatives like options and warrants; (f) Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments; (g) Proprietary or nonproprietary membership certificates in corporations; and (h) Other instruments as may in the future be determined by the Commission. "Security Element" means the element of a Transaction which is intended by the parties to be performed by the transfer by one party to the other of a specified Security lodged in the Depository System. "Settlement" means the completion of a Transaction through the Depository System effected by the delivery of the Securities Element and/or the payment of the Cash Element in the quantity or amount determined by the clearing house. The terms "settle", "settled" and "settling" when used in these Depository Rules shall refer to the verb or adjective forms of Settlement, as the context may imply. "Settlement Bank" means a banking institution acceptable to Depository through which cash entitlements are distributed by Depository Nominee to Participants, and fees and charges are paid by Participants to Depository. "Settlement Date" means a Business Day when the Settlement of a Transaction must be effected pursuant to law, regulations, these Depository Rules, contract or established industry practice. EHaASD "System Error" means an error or loss of data arising from system malfunction. "Trade" means a Transaction, whether Delivery Versus Payment or Free of Payment, involving an agreement for the transfer and disposition of Eligible Security from one Beneficial Owner to another. "Transaction" means any activity in the Depository System affecting Beneficial Ownership, or any other beneficial right or interest, such as payment and distribution of Corporate Action proceeds, profit sharing, investor right fulfillment, in Eligible Securities lodged/deposited in the Depository System. "Transfer Agent" or "Registrar" means the party authorized and appointed by the issuer to issue and transfer the Securities of the Issuer in favor of their registered or legal owner. "Upliftment" or "Securities Withdrawal" means the withdrawal of Securities from the Depository System. The terms "uplift", "uplifted" and "uplifting" when used in these Depository Rules shall refer to the verb or adjective forms of Upliftment, as the context may imply. "Warranty" means the unconditional and irrevocable commitment and undertaking of a Participant to hold Depository free and harmless for any loss or damage that Depository or the Depository System may sustain due to causes attributable to the Participant. Rule 1.2 Legal Terminologies and Interpretation. 1.2.1 Legal Terminologies Legal words or phrases with established statutory or jurisprudential meanings which are not otherwise expressly defined in these Rules shall be used in accordance with such meanings. 1.2.2 Technical Meanings Words or abbreviations, which have well-known technical or trade meanings and are not expressly defined in these Rules, shall be used in accordance with such recognized meaning. 1.2.3 Persuasive Authority Widely-accepted and established terminologies and practices in other jurisdictions where the Depository System of SCCP has been in operation shall have persuasive effect in the resolution of any questions arising from the Depository Rules. 1.2.4 Titles and Subtitles Titles of the articles, sections, subsections, paragraphs, and subparagraphs are placed herein for convenient reference only and shall not, to any extent, have the effect of modifying, amending, or changing the express terms and provisions of these Rules. 1.2.5 Words and Gender or Number Unless the context clearly indicates the contrary, the singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. 1.2.6 Interpretation ACcTDS Unless expressly provided herein to the contrary, all questions concerning the interpretation or application of or any other matter in connection with the Depository Rules (including, without limitation, any Order, direction or note issued by SCCP) shall be determined by SCCP. Such determination by SCCP shall be final and binding on all parties concerned. Rule 1.3 Book-Entry System 1.3.1 Depository System The Depository System is a system for the central handling of Securities by which all Securities of a particular class or series of any Issuer may be transferred, loaned, collateralized, subjected to other Transactions and/or Corporate Actions, all by book-entries in the records of the Depository without physical delivery of Certificates, or otherwise to permit or facilitate the Settlement of Transactions without physical delivery of Certificates. 1.3.2 Service Standard The SCCP shall provide a prompt, accurate and reliable Depository and/or Settlement System for Eligible Securities in accordance with these Depository Rules and the Depository Operating Procedures. Rule 1.4 Depository Rules and Depository Operating Procedures. 1.4.1 Scope of Depository Rules The Depository Rules adopted by SCCP which govern the provision and the use of the Service provided by SCCP to Participants are: (a) Rule 1 , the General Rules which apply to the provision by the Depository of the Services in the Depository System and their use by Participants; (b) Rule 2 , the Participation Rules which apply to the eligibility to be a Depository Participant; (c) Rule 3 , the Depository Service Rules which apply to Depository Services provided to Participants; (d) Rule 4 , the Settlement Service Rules which apply to Settlement Services provided to Participants; (e) Rule 5 , the Risk Management Rules which apply to the risks attendant to the provision of Depository and Settlement Services. 1.4.2 Amendment of Depository Rules The SCCP Board may, from time to time, amend the Depository Rules. SCCP shall promptly notify Participants of any proposal to change, revise, add or repeal any Depository Rule including the text of the proposed rule and a brief description of its purpose and its effectivity date. Participants may, within the time prescribed by the SCCP Board, submit to SCCP for its consideration their comments with respect to any such proposal. Such comments shall be filed with the SCCP records and copies thereof delivered to the SEC upon request of the latter. CSTDEH 1.4.3 Depository Operating Procedures SCCP may prescribe and, from time to time, amend the Depository Operating Procedures. Participants shall be bound by the Depository Operating Procedures and amendments thereto in the same manner as they are bound by the Depository Rules. 1.4.4 Forms In connection with any Transaction or matter handled through, with, or by SCCP under or pursuant to the Depository Rules and Depository Operating Procedures, such forms, lists, instructions, requests, notices, and other documents shall be used as SCCP may, from time to time, prescribe. Additions to, changes in, and elimination of any forms may be made by SCCP at any time in its sole discretion. 1.4.5 Notice SCCP shall make available to each Participant a copy of the Depository Rules and Depository Operating Procedures, and promptly give notice to Participants of any amendment or change thereto and its effective date. The effective date of an amendment shall not be less than fifteen (15) days from the date of such notice, unless the SCCP Board determines that circumstances require prompt or immediate action and specifies a shorter period of time for its effectivity. Rule 1.5 Provision of Services. 1.5.1 Sufficient Instructions SCCP shall extend the provision of, and Participants shall use, the Depository System only in accordance with the Depository Rules and Depository Operating Procedures as well as such orders or directives issued by relevant government and regulatory agencies. 1.5.2 Depository and Settlement Services SCCP shall provide the Settlement Services and the Depository Service as two separate Services which carry separate and distinct rights, obligation and responsibilities. Where a Participant uses more than one Service and SCCP has determined an actual or imminent default of Participant in one Service, SCCP shall be entitled to treat all of that Participant's rights, obligations and liabilities as if Participant were also in default in the other Service used by Participant. 1.5.3 Other Services SCCP may provide such other services as SCCP may from time to time determine as necessary and incidental to the performance of its duties and responsibilities as Depository. 1.5.4 Services to non-Participants SCCP may from time to time act in delivering Securities to and receiving Securities from Persons, firms, or organizations which are not Participants, and paying to and receiving from such Persons, firms or organizations amounts payable in connection with such receipts and deliveries, subject to approval of the SCCP Board. 1.5.5 Cessation of Services SCCP, notwithstanding anything herein contained, may in its discretion, upon prompt notice, cease to provide, temporarily or indefinitely, services for any Transaction, class of Transactions or Securities. 1.5.6 Participant Identifier A Participant shall be allocated a unique identification code, and each user account shall be allocated a unique identification code, which shall be used on the face of all forms used by Participant in connection with the Depository System. EAISDH 1.5.7 Waiver SCCP may waive, modify or suspend any provision of the Depository Rules and Depository Operating Procedures whenever in its sole judgment such extension, waiver, modification or suspension is necessary or desirable under the circumstances. Any such action by SCCP shall be deemed to be made on a case to case basis, and shall not operate as a waiver, modification, or suspension of the Depository Rules and Depository Operating Procedures in all instances. SCCP shall keep a record of such extension, waiver, modification or suspension including justifications therefor, which may be made available for inspection by the Participants and SEC upon request. Rule 1.6 Eligible Securities. 1.6.1 Eligibility Policy SCCP shall determine from time to time which Securities are eligible for lodgment with the Depository System. It shall be the policy of SCCP to accept Securities as eligible commencing from the listing date of the security, motu proprio or upon the request of an interested party, to the maximum extent consistent with its operational capabilities. 1.6.2 Exceptions to Policy SCCP may refuse to accept a Security as eligible or may discontinue the eligibility of any Security previously accepted as eligible, for any reason including, but not limited to any of the following: (a) SCCP lacks the operational capability with respect to such Security; (b) the Security is neither traded nor likely to be traded on an exchange or on an organized market, nor subject to quotations (representing bona fide offers to Participants to buy and sell in reasonable quantities at stated prices); (c) the trading of the Security has been suspended by an order of the SEC, an Exchange or any other authority having the power to suspend trading in such security; (d) the market for the Security has not demonstrated reasonably sufficient liquidity; (e) the Issuer of the Security has been in default on payments of declared dividends; interest or face value of the Security; (f) during the preceding six consecutive months, the level of activity in SCCP of the Security or the level of service provided by the Transfer Agent or the Issuer in connection therewith has been insufficient to render the continued eligibility of the Security practical; aICcHA (g) the continued eligibility of the Security may adversely affect the financial condition of SCCP or of a Participant; (h) the refusal or discontinuance of eligibility of the Security is deemed by SCCP in good faith to be necessary or appropriate in the public interest under the circumstances. Any security which was accepted by SCCP as an eligible security, but which was subsequently deemed ineligible, shall be kept in the SCCP Depository system for safekeeping until further notice, subject to certification by the Participant that all taxes applicable for transfers between or among Participants' accounts have been paid. 1.6.3 Conditions SCCP may, in its discretion and at any time, impose or remove conditions on any Security, including constraints or prohibitions in respect of any Transaction provided that: (a) SCCP shall, acting in good faith, take into consideration the best interests of all Participants; (b) Prior to imposing or removing such condition: i. SCCP shall take reasonable steps to give a Participant sufficient prior notice to enable the Participant to take alternative means to carry out its Transactions, including the Security Withdrawal/Upliftment of lodged/deposited Securities or to refrain from lodging/depositing those that may become subject to the condition; and ii. SCCP shall notify CMIC and PSE or successor entities before the lifting for the said entities to have an opportunity to state their position on the matter. 1.6.4 List SCCP shall maintain a list of Eligible Securities and make it available to all market participants and the public. The list of Eligible Securities shall be promptly updated as necessary. Rule 1.7 Securities Accounts. 1.7.1 Securities Account A Participant shall be provided with Securities Account(s) which shall reflect the balance of Securities held by the Participant resulting from all Security Deposits/Lodgments, Security Withdrawals/Upliftments, and Corporate Action Entitlements as well as Transactions executed through the Depository System. EHSADc 1.7.2 Deposit Sub-accounts For each Deposit Account, a Participant may open and maintain Sub-accounts. Each such Sub-account shall be designated in a clearly distinctive manner by way of numbering, lettering, naming or any combination thereof. (a) For each client, the Participant may open and maintain a Sub-account ("Client Sub-account"). Each Client Sub-account shall be covered by a separate agreement between the Participant and the client, which agreement shall be kept in the records of the Participant. Beneficial Ownership over all Securities deposited in the Client Sub-account shall belong to the client, who shall have the right of access to information from SCCP pertaining to the Client Sub-account. Notwithstanding the foregoing, a client may opt not to have a separate Sub-account. Securities of clients opting out shall be kept in a separate Omnibus Client Account of the Participant, as defined in the next sub-paragraph. (b) All client Securities that are not in a Client Sub-account shall be maintained in a separate Omnibus Client Account. Securities of local clients shall be kept in a separate Omnibus Client Account ("Local Omnibus Client Account"). Likewise, Securities of all foreign clients shall be kept in a separate Omnibus Client Account ("Foreign Omnibus Client Account"). (c) All Securities beneficially owned by the Participant shall be kept in a separate Sub-account ("Proprietary Sub-account"). 1.7.3 Transfer of Securities A Participant may transfer Securities from one Sub-account to another Sub-account within the same Deposit Account, or from one Deposit Account to another Deposit Account, subject to submission of a certification in writing and under oath by the Participant that there is no change in Beneficial Ownership of the Securities as required in the Depository Rules and Operating Procedures. 1.7.4 Book-Entry Delivery The book-entry delivery of a Security pursuant to an Instruction of Participant is effected by making appropriate entries in the Depository System for debiting and crediting the Securities Accounts or Sub-accounts. 1.7.5 Finality and Irrevocability Once entries in a Participant's Account are entered and debited and credited accordingly, the balances in that Account are considered final and irrevocable. 1.7.6 Constructive Delivery The making of an appropriate book-entry in the Securities Accounts of Participants to effect a debit-credit of a Securities Account constitutes conclusive evidence of the agreement of Participants that such Security has been constructively delivered to the transferee-Participant and is held for the transferee-Participant. EITcaH Rule 1.8 Cash Account. 1.8.1 Cash Account A Participant shall be provided with a Cash Account in the Depository System which shall reflect the balance of the Cash Settlement Account maintained by the Participant with the Settlement Bank. 1.8.2 Maintenance of Bank Accounts The Participant shall maintain the following accounts ("Bank Account") with the Settlement Bank: (a) Cash Settlement Account for effecting the settlement of a Cash Element of a DVP/RVP Transaction, as well as cash credits arising from the distribution of cash dividends. (b) Designated Account duly covered by an Automatic Debit Arrangement (ADA) Agreement with the Settlement Bank for cash debits arising from the actual payment of fees and charges to SCCP. 1.8.3 Payment Order SCCP shall give instructions to the Settlement Bank to effect debit/credit or use payment order on the Participant's Bank Accounts for the purpose of effecting: (i) the settlement of the Cash Element of a DVP/RVP Transaction; (ii) the cash credits from the distribution of cash dividends; and (iii) the payment of fees and charges to SCCP. For this purpose, the Participant hereby irrevocably authorizes SCCP to give such instructions to the Settlement Bank, and Participant warrants that arrangements have been made with the Settlement Bank for the unconditional acceptance by the latter of SCCP's instructions. The Participant shall not countermand, revoke, or in any manner undermine the authorization of SCCP to give instructions to the Settlement Bank. aASDTE 1.8.4 Payment Final and Irrevocable Payment by a Participant or by a Settlement Bank shall be final and irrevocable. In no case shall such payment be revoked, countermanded, cancelled, returned through the payments clearing system, refused for payment or otherwise prevented from consummation. Rule 1.9 Records. 1.9.1 Reports The format, medium, contents and release of reports to Participants evidencing the records of SCCP shall be determined by SCCP and set forth in the Depository Operating Procedures. 1.9.2 Confirmation Upon availability of a report or record in the Depository System, the Participant shall carefully review and verify the genuineness, accuracy, completeness and correctness of such report or record. The Participant shall have until the close of the Business Day immediately following the Business Day on which the report or record is made available in the Depository System to the Participant within which to inform SCCP of any discrepancy between the report or record and the Participant's internal records. If no discrepancy is reported within that period then the report or record shall be deemed genuine, accurate, complete and correct, and may not be refuted or disclaimed. 1.9.3 Accuracy The Participant warrants, and assumes full responsibility for, the truth, accuracy and validity of the records and entries in its Securities and Cash Accounts, and further warrants and represents that the contents of any print-outs of such records and entries which it may generate are accurate reproductions of its internal records and the records and entries in its Securities and Cash Accounts. 1.9.4 Correction SCCP may, on its own, correct any system error or manifest error in any entry report or record in the Depository System. A Participant shall make its records conform to the records of SCCP, which shall prevail over the Participant's records in case of any discrepancy. 1.9.5 Best Evidence The reports and records of SCCP and the Depository System shall prevail over the Participant's internal records, and shall constitute, with respect to any and all Transactions, the best evidence of such Transactions, without prejudice to the right of the Participant's clients to prove their respective rights, title and entitlements. 1.9.6 Retention SCCP shall retain its service records for ten (10) years after the date on which the entry was made, or such other period as may be prescribed by the Commission. The records may be retained in any appropriate form. After that period, the records may be discarded, destroyed, or otherwise disposed of by SCCP. 1.9.7 Confidentiality Any information about a Participant or its Securities Accounts and Cash Account in the Depository System obtained by SCCP in the course of its operations shall be kept confidential by SCCP, unless: (a) required by law, or an order of a court, regulatory body (including the Self Regulatory Organization (SRO) to which the Participant belongs, if any), quasi-judicial body, or government agency exercising jurisdiction over the Participant or the Transaction; (b) the Participant for justifiable grounds authorizes and directs SCCP to disclose the information; cSTHAC (c) made to directors, employees, agents, auditors or legal counsel of SCCP, to the extent required by them to perform their duties; (d) the disclosure is statistical or summary in nature without identifying the Participant; or (e) limited to Securities held for a Participant, as requested by the Issuer. Notwithstanding the foregoing exceptions, SCCP shall, prior to disclosure, notify the concerned Participant in case notice is required under the law or by relevant court, regulatory body, or quasi-judicial body. Rule 1.10 Notices. 1.10.1 Notice to Participants Notices shall be given by SCCP to a Participant through the Depository System, or by electronic mail at the last email address provided by the Participant, or by confirmed facsimile transmission, or by personal delivery, or via an official website. 1.10.2 Notice to SCCP Notices shall be given by the Participant to SCCP in writing addressed to the President or Chief Operating Officer and delivered at the head office of SCCP. Rule 1.11 Fees, Fines and Penalties. 1.11.1 Formula The SCCP Board shall establish, and may revise from time to time, a reasonable schedule of fees, fines and charges due SCCP for the depository service, as well as schedule of penalties which may be imposed for violations of the SCCP Rules and Operating Procedures. The schedule of fees, fines and penalties shall be made available via the official website. ADaECI 1.11.2 First Lien All outstanding fees, charges and penalties payable to SCCP shall have first priority in the Settlement process, and shall constitute a first lien on all Cash Accounts and Bank Accounts of a Participant, except Reserve Bank Accounts for clients, notwithstanding any regulation to the contrary. Rule 1.12 Appeal and Arbitration. 1.12.1 Appeal to Depository Board A Participant may raise on appeal any decision of SCCP management to the SCCP Board within ten (10) calendar days from receipt by the Participant of the decision, stating therein the grounds for the appeal. The SCCP Board shall not entertain any frivolous, dilatory or manifestly unmeritorious appeals. Within thirty (30) calendar days from receipt of the appeal in writing by SCCP, the SCCP Board shall give the Participant the opportunity to be heard. The SCCP Board shall not be bound by the technical rules of evidence in the conduct of the hearing and deliberation of the decision under appeal. The decision shall become final and effective once affirmed by a majority of the members of the SCCP Board and the Participant has been notified of the decision. 1.12.2 Settlement by Arbitration Subject to prior compliance with the procedure in Rule 1.12.1, if applicable, any controversy or claim arising out of or relating to these Depository Rules, except any appeal on disciplinary actions imposed by the Depository pursuant these Rules, shall be resolved solely and exclusively by means of arbitration in accordance with the UNCITRAL Rules of Arbitration and its implementing rules and regulations. The arbitration shall be conducted in Metro Manila applying Philippine Law. Any arbitral decision or award shall be enforceable in any court having competent jurisdiction. RULE 2 SCCP Participation Rule Rule 2.1 Admission of Participants. 2.1.1 Qualified Applicants An applicant to be a Participant in the Depository Services of the Central Clearing and Central Settlement System (CCCS System) must be: i. A broker, dealer and/or custodian of Securities; and ii. A Participant in good standing with SCCP, Registry or any such SCCP-accredited entity; and iii. A holder of active Cash Accounts with a Settlement Bank; or iv. Such other party as SCCP will reasonably consider qualified as a Participant including, but not limited, to the following: (a) Financial Institutions; (b) Insurance Companies; (c) Investment Houses; (d) Funds, including a Trust Funds and Mutual Funds; (e) Trust Companies. 2.1.2 Qualifications and Standards A party qualifies as a Participant if: (a) It is duly licensed by the relevant government agency or regulatory authority; and (b) It is in good standing under the Philippine laws pursuant to which it is established and regulated as certified to by the appropriate government or other regulatory agency exercising jurisdiction over it; and (c) It owns, manages, controls or has custody of Securities; and (d) It is not subject to a relevant legal or regulatory disqualification; and HDIATS (e) It has adequate trained personnel, premises, hardware, software and data processing capabilities, telecommunications link-up, books and records enabling it to fulfill its obligations and operational requirements promptly and accurately; or (f) It meets such other standards and processes and such other qualifications satisfactory to SCCP for the protection of SCCP and other Participants, and is not subject to any disqualification, including conviction by a competent judicial or administrative body of an offense involving moral turpitude, fraud, embezzlement, counterfeiting, theft, estafa, misappropriation, forgery, bribery, false oath, or perjury, or of a violation of securities, commodities, banking, real estate or insurance laws and regulations, suspension or expulsion from a securities exchange, a clearing or depository corporation, or accused of misrepresentation or omission of a material fact to SCCP. Rule 2.2 Application Procedure. 2.2.1 Participation Application An applicant shall duly accomplish and deliver to SCCP an application form and such other documents as may be required by SCCP. 2.2.2 Review of Application The SCCP has twenty (20) business days from date of submission of a complete set of application documents to review, reject or approve the application. If an applicant fails to submit all the proper information and documents that may be required by SCCP, SCCP may, depending on the nature and gravity of the deficiency as determined by SCCP, deny the application outright or allow the applicant to correct the deficiency within fifteen (15) days from receipt of notice from SCCP. If the applicant fails to sufficiently correct its deficiencies during the period, the application shall be deemed abandoned. On the other hand, if the applicant submits the required information or correct its deficiencies during the period, then the application shall be deemed amended accordingly. Any misleading information by or misrepresentation on the part of the applicant that may be discovered prior to approval by SCCP of the application shall result in immediate disqualification of the application with prejudice to a re-filing of the same. Any misleading information or misrepresentation discovered by SCCP after approval of the application shall subject the Participant to such disciplinary actions, penalties and/or sanctions as may be provided by these Rules. The SCCP reserves the right to reject an application for any reason. 2.2.3 Approval Once the participation application is approved, the SCCP shall immediately notify the applicant. Upon receipt of such notice, the applicant shall have thirty (30) days within which to execute and submit to SCCP at least two (2) notarized originals of the Participantship Agreement. aSIDCT If the applicant fails to execute and submit the Participantship Agreement within such 30-day period the application shall be deemed withdrawn and the approval shall be deemed ineffective, without prejudice to the filing of a new application. 2.2.4 Depository Membership Fee An applicant who has been accepted as a Participant shall pay the required one time participation fee in the amount, form and manner as may be determined by SCCP from time to time. 2.2.5 Participant as Principal A Participant who performs or carries out any contract or Transaction in the Depository on behalf of any Person who is not a Participant shall be liable as principal in these underlying contracts or Transactions. aHIDAE Rule 2.3 Authorized Representatives, Security and Reliance. 2.3.1 Authorized Representatives Not later than sixty (60) days from approval of the application, the Participant shall duly designate in writing a representative(s) and alternate(s) who shall be authorized to act on behalf of the Participant on all matters relating to the Depository System. The written designation shall include the corresponding contact information of the representative(s) and the alternate(s). The Participant shall promptly notify SCCP in writing of any change in the representative(s) and/or the alternate(s) and their corresponding contact information. SCCP will allow access and/or participation by the Participant in the Depository System solely through the duly designated representative(s) or, in his absence, the alternate(s). SCCP may rely on, and the Participant shall be bound by, all communications and instructions in whatever form, acts and/or omissions by the Participant's duly authorized representative(s) or alternate(s). Lastly, SCCP will only act on any communication or instruction from the Participant if such communication or instruction is made by a duly authorized representative(s) or alternate(s), or if such communication or instruction constitutes an Instruction as defined by these Depository Rules. 2.3.2 Security The Participant represents and warrants to SCCP that only the Participant's representative(s) or alternate(s) can access and use the Depository System. Further, the Participant represents and warrants to SCCP that the key file and passwords to the Depository System shall not be disclosed, or made available, to anyone other than the Participant's duly authorized representative(s) and alternate(s). 2.3.3 System Maintenance (a) The Participants shall be responsible for establishing a Disaster Recovery Program (DRP) as a contingency for any fortuitous or inevitable event that may render them unable to access the Depository System. (b) In the event that the Participant's main and back-up systems become non-operational, SCCP may provide workstations for temporary use of the Participant, subject to availability thereof. 2.3.4 SCCP Reliance/Free and Harmless SCCP shall not be responsible or liable for any act or omission made in good faith in reliance upon any Instruction from the Participant's representative(s) or alternate(s). Further, the Participant shall hold SCCP free and harmless from any and all claims, liabilities, losses, expenses and/or damages arising from, or in connection with, SCCP's act or omission in reliance upon any communication or Instruction from the Participant's representative(s) or alternate(s). DSITEH Rule 2.4 Warranties and Representations. 2.4.1 Binding Effect of SCCP Depository Rules The SCCP Depository Rules shall be binding upon the Participants, its officers, directors, employees, agents, advisors, and its clients, and shall be deemed to form an integral part of the terms and conditions of every related contract or transaction which the Participant may enter into with its clients. 2.4.2 Participants Actions The Participant warrants, and assumes full responsibility for, the genuineness and accuracy of all its acts, omissions and representations in all its transactions and dealings with SCCP, other Participants, and the Participant's clients. 2.4.3 Representation and Warranty on Account Balance Any Instruction given by a Participant to SCCP for the settlement of a Transaction, or the book-entry delivery of Securities, or the taking of any steps as the depository of Securities held for the Participant, constitutes the representation and warranty of the Participant to SCCP that the Participant has and will continue to maintain a balance in its Securities and/or Cash Account sufficient to support such Instruction. 2.4.4 Authority from Client By accessing and using the SCCP Depository System, the Participant represents and warrants to SCCP that the Participant has explained the SCCP Depository Rules and SCCP Operating Procedures and has secured the agreement of its corresponding clients to fully comply with the SCCP Depository Rules and SCCP Depository Operating Procedures, and any amendments, supplements or modifications thereto, and that the clients have agreed that: EAHDac (a) Securities under the clients' control, custody or Beneficial Ownership shall be held by the Participant in the SCCP Depository System; and (b) The clients shall comply and be bound by the Participant's Instructions with respect to such Securities. 2.4.5 Segregation of Securities The Participant shall lodge all Securities held on behalf of its clients in a separate Client Sub-account or in an Omnibus Client Account, and shall segregate, keep complete records of, and account for all such Securities including their fruits and rights at all times. 2.4.6 Authority from Third Party Whenever a Participant issues an Instruction on behalf of a third party in relation to deposited/lodged Securities, such Participant shall be deemed to represent and warrant to SCCP that such third party has given the Participant a special power-of-attorney to act on its behalf with respect to such deposited/lodged Securities and that the third party agrees to be bound by the SCCP Depository Rules. Nevertheless, SCCP shall not be bound to comply with such Instruction and all deliveries of such deposited/lodged Securities may be made to, or to the order of, the Participant. 2.4.7 Execution of Other Acts Every Participant shall promptly comply with any instruction from SCCP to enable SCCP to perform its functions under these Depository Rules. 2.4.8 Reporting of Fraud Whenever a Participant acquires any information relating to any matter set forth below, the Participant shall be obligated to immediately submit a detailed written report to the President and CEO of SCCP or his designated representative: (a) Any violation of the SCCP Depository Rules or misuse of the Depository System; (b) Any error regarding any data in the Depository System; (c) Any fraud or criminal activity committed or about to be committed in connection with the Depository System; (d) Any unauthorized or criminal access to or use of the Depository System; or (e) Any negligent, fraudulent or willful act or omission by any Participant or staff of SCCP. 2.4.9 Submission to Disciplinary Action Each Participant shall abide by all disciplinary measures imposed by SCCP on such Participant, including reprimand, warning, fines, suspension and termination, and hereby waives any right it may have to delay or render useless the enforcement of such disciplinary action. 2.4.10 Constraints Each Participant hereby represents and warrants, and covenants, that it shall access and use the Depository System only in compliance with these Depository Rules and any applicable law or regulation. 2.4.11 Covenant to Provide Information Each Participant covenants to provide, or cause to be provided, as and when required information with respect to any Transaction in compliance with: aATESD (a) A lawful request of the issuer of the Security in order to comply or facilitate compliance with any legislation, rule, regulation, order of a court or administrative or regulatory body, by-law or provision to which the issuer is subject; or (b) Any legislation, regulation, or order of a court or administrative or regulatory body. Rule 2.5 Participant Indemnity and Liability. 2.5.1 Indemnity of Participant for Services Each Participant shall hold harmless SCCP and all other Participants, as well as all their respective partners, directors, trustees, officers, employees, agents and contractors from and against any loss, damage, cost, expense, liability or claim (including without limitation the cost of legal counsel to advise on or defend against such claims) suffered or incurred by or made against it, them or any of them arising from: (a) Any interruption, malfunction or disruption of any service in the Depository System to the extent caused or contributed directly or indirectly by any negligent, reckless, willful, fraudulent or dishonest act or omission of a Participant or of any director, trustee, officer, partner, employee, servant, contractor or agent of a Participant done while acting in the course of office or employment or made possible by information or opportunities afforded by such office or employment; (b) Any false, incomplete, or inaccurate information or documentation provided by a Participant; (c) Performance by SCCP of any procedure which it must or may perform under the SCCP Depository Rules or Operating Procedures including without limitation the making of corrections of any entry among others; (d) The reliance on or use by SCCP of any declaration provided by a Participant in the form and time required by SCCP and made in the manner contemplated by the SCCP Depository Rules; (e) A Participant's failure to provide or cause to be provided a declaration as required; (f) Reliance by any Person on a declaration or information provided by the Participant; or (g) Any breach of a Participant's obligations, covenants, representations or warranties under these Depository Rules, or the corresponding application and Participantship Agreement. 2.5.2 Indemnity Arising from Compliance with Participant's Instruction Each Participant shall indemnify and hold harmless SCCP and its respective directors, officers, employees, agents and contractors from and against any loss, damage, cost, expense, liability or claim (including without limitation, the cost of legal counsel to advise on or defend against such claims) suffered by or made against it, them or any of them arising from any act or omission of SCCP pursuant to a Participant's Instruction. 2.5.3 Exclusive Liabilities SCCP shall not be liable for the performance of any function that is due to be performed by related agencies, such as the Exchange, registries and Settlement Banks or any other settlement agencies. Neither shall SCCP be liable for any loss, damage, cost, expense and liability suffered by a Participant and/or its clients arising from the use of any depository, registry, Settlement Bank or any other settlement agency systems. Rule 2.6 Suspension, Termination and Resignation. 2.6.1 Causes for Suspension or Termination A Participant's Participantship status may be suspended or terminated for any of the following grounds as determined by SCCP in its sole discretion: (a) Breach by the Participant of any provision of the SCCP Depository Rules and/or the SCCP Depository Operating Procedures; (b) Violation by the Participant of securities laws, rules and regulations; (c) Loss of qualification or non-compliance by the Participant with SCCP's Participantship standards; (d) Circumstances affecting the financial or operating condition of the Participant including, but not limited to, the voluntary or involuntary filing of a petition for bankruptcy, winding-up, liquidation, receivership or insolvency of the Participant; the filing of a voluntary or involuntary application for suspension of payments of the Participant; the disposal by the Participant of all or substantially all of its assets; assignment by the Participant of its assets for the benefit of creditors; dissolution of the Participant (whether voluntary or involuntary); take-over of Participant's operations pursuant to the Securities Regulation Code (Republic Act No. 8799, as amended) and its Rules; or the merger or consolidation involving the Participant (except where the surviving entity is the Participant), reorganization or restructuring of the Participant; HCacTI (e) Revocation of the registration or license, or suspension, or expulsion of the Participant by any regulatory or competent authority having jurisdiction over it (including the SRO to which the Participant belongs, if any); (f) Order or decision of a competent judicial or administrative authority enjoining the Participant from engaging in or continuing any conduct or practice related to Securities or payment transactions; or (g) Similar or analogous circumstances that in the reasonable opinion of SCCP warrants the suspension or termination of the Participantship status. A Participant shall have the responsibility to notify SCCP as soon as it becomes aware of circumstances which may warrant suspension or termination of its Participantship. 2.6.2 Procedure for Suspension or Termination Whenever any of the grounds mentioned in Rule 2.6.1 above is present with respect to a Participant, SCCP shall notify the Participant in writing, at its last registered address on record with SCCP, of the existence of any such ground(s). Such notice shall be sent in accordance with Rule 1.10.1 hereof and shall set forth the ground(s) constituting the violation and the facts in support thereof. Within five (5) Business Days from such notice, the Participant shall file its written response explaining, clarifying or commenting on the ground(s) stated in the notice. Failure of the Participant to timely file its written response shall result in the waiver by the Participant of its right to file such response. An Investigation Committee composed of the SCCP President or duly designated alternate, SCCP Chief Operating Officer or duly designated alternate, and SCCP legal counsel shall convene no later than three (3) Business Days from receipt of Participant's written response or from the lapse of the period within which to file the same, for the purpose of conducting an investigation and deliberating on the sufficiency of the ground(s) against the Participant. The Participant may be required by the Investigation Committee to be present during the investigation to further explain, clarify, comment on matters touched upon in its written response, or respond to questions from the Investigation Committee. The Participant may, if so desired, be assisted by legal counsel during such hearing. The Investigation Committee shall then decide whether there are sufficient ground(s) to suspend or terminate the Participant's Participantship status and/or to take such other action as it may deem necessary under the circumstances. 2.6.3 Decision of Suspension or Termination Any decision suspending or terminating a Participant shall be in writing, stating the basis thereof, and imposing the period of suspension or the effective date of termination. A fine may be meted out concurrently with suspension or termination, at the discretion of the Investigation Committee. No decision to suspend or terminate the Participantship status shall take effect until a notice of such decision has been sent to the Participant pursuant to Rule 1.10.1. SCCP shall also notify the Securities and Exchange Commission, the PSE, and any other institutions involved in the Depository process for their information and/or appropriate action. SCCP shall make the notice available to all via the official website. 2.6.4 Appeal of the Decision A Participant may appeal any decision to suspend or terminate its Participantship status by filing a written appeal with the SCCP Board within ten (10) Business Days from receipt of the decision. The suspension or termination of the Participantship status shall remain effective pending the outcome of such appeal. 2.6.5 Resignation 2.6.5.1 Obligations of a Participant A Participant may resign as a Depository Participant provided that it complies with the following: (a) Notify SCCP in writing of its intention to resign at least one (1) month prior to the intended date of resignation. The SCCP may, at its discretion, vary the notice period; (b) Pay all outstanding charges due to SCCP as of the effective date of resignation; (c) If required by SCCP, submit a letter of credit or a bank guarantee issued by a bank acceptable to SCCP, under terms and conditions set by SCCP as necessary to cover possible claims; (d) Comply with such other requirements that SCCP may require. TCADEc 2.6.5.2 Resignation shall be effective upon compliance with the foregoing requirements, but in no case shall be earlier than the intended effective date. Until its resignation is effective, the Participant shall continue to comply with the SCCP Participantship Agreement and Depository Rules. 2.6.6 Effects of Suspension, Termination or Resignation A Participant who has given notice to resign, or whose Participantship status is suspended or terminated shall not be allowed to gain access and use the facilities of the SCCP Depository System: Provided that, SCCP shall determine what actions may be taken with respect to Transactions of a suspended or terminated Participant which have not been settled or completed, as well as with respect to Securities held by the Participant in its Proprietary Securities Account and Client Securities Account. SCCP may take any action it deems necessary to maintain the provision of Services and the integrity of the SCCP Depository System. 2.6.7 Preventive Suspension Notwithstanding the foregoing, SCCP may, in order to avoid grave and irreparable damage to the Depository System, order the immediate suspension of a Participant pending notice, hearing and final decision on its suspension or termination, until SCCP determines that the risk of damage no longer exists, at which time SCCP may lift the preventive suspension. 2.6.8 Automatic Suspension or Termination Any Participant who is suspended or terminated as a Trading Participant or Clearing Member shall automatically be suspended or terminated as a Depository Participant. The suspension shall be lifted upon receipt of notice from the regulatory agency which imposed the suspension that such suspension has been lifted. 2.6.9 Survival of Obligations The suspension or termination of Participantship status, or the resignation of a Participant, shall not in any way waive any of its duties, liabilities or obligations under the SCCP Depository Rules which have otherwise accrued or existed as of the date of such suspension, termination or resignation, or which may thereafter arise by reason of transactions, facts or circumstances occurring or in existence on or before such date. SHECcD 2.6.10 Civil and Criminal Liability The suspension, termination or resignation of a Participant shall not prejudice the right of SCCP and/or any other Participant(s) to take or maintain any civil, criminal or administrative action against the suspended, terminated or resigned Participant. RULE 3 Depository Service Rule 3.1 Depository Service. 3.1.1 Securities Depository Under these Rules, SCCP shall act as the central depository of Eligible Securities lodged in the Depository System. Without prejudice to the obligation of the Participant to account for Defective Securities, all Eligible Securities of an Issuer when lodged within the System shall be deemed Fungible and may be sold, transferred, collateralized, encumbered, cleared and settled or otherwise dealt with through book-entries without physical delivery of any Certificate. 3.1.2 Presumption of Beneficial Title Securities lodged by the Participant with SCCP pursuant to these Rules shall be immobilized. The legal title to such immobilized Securities shall be transferred to SCCP Nominee Corp. Such lodged Securities shall be reflected in the Participant's Securities Accounts. Notwithstanding the foregoing, the Participant shall segregate Securities held in its Securities Accounts properly and in accordance with Rules 1.7.2 and 2.4.5 of these Rules. However, with respect to Securities contained in a Participant's Client accounts, the clients are presumed to be the Beneficial Owners. 3.1.3 Safekeeping SCCP shall hold the Securities in the Depository Service as depository (and as nominee and/or trustee through SCCP Nominee Corp.) of the Participants, to whose Securities Accounts such Securities are credited from time to time subject to their Instructions. The transfer of legal title over lodged Securities to SCCP Nominee Corp. is without consideration and is purely a necessary function of SCCP's role as depository. SCCP is not a fiduciary of Participants. All the terms and conditions of the deposit are contained in the Depository Agreement. 3.1.4 Function as Depository SCCP gives value to a Participant by crediting the Participant's Securities Account for the Securities lodged, by assuming the obligation to safe keep and return such Security to the Participant upon its Instruction, and by permitting the Securities to be held in the Depository Service and made available for Transaction in the Depository Service and Settlement Service. acSECT 3.1.5 Obligation to Deliver SCCP shall deliver to the Participant on request those Securities held by SCCP Nominee Corp. for the Participant as shown in the records of SCCP for the Participant's Securities Accounts. The obligation of SCCP to deliver Securities to a Participant is subject to any restrictions, constraints or conditions imposed in accordance with the Rules and to the security interests, if any, granted pursuant to the Rules. 3.1.6 Operations The Depository Service and its facilities are extended by SCCP and made available to Depository Participants who maintain the relevant Accounts under these Depository Rules. Rule 3.2 The Depository Service for Corporate Securities. 3.2.1 Security Deposit/Lodgment 3.2.1.1 Security Deposit/Lodgment of Corporate Securities and Surrender of Certificates A Participant may not use the Depository System unless it has properly lodged its Eligible Securities as provided under this Section 3.2.1.1. To lodge Securities into the Depository System, a Participant shall enter the proper Security Deposit/Lodgment Instruction and deliver the Certificates covering the Securities to the Transfer Agent, which Certificates shall be subject to the unconditional confirmation by the Transfer Agent that the Securities represented thereby are not Defective Securities. Lack of such confirmation by the Transfer Agent shall prevent the security deposit/lodgment of the Security in the Depository System. Upon confirmation by the Transfer Agent, the crediting of the Securities will be considered final and irrevocable. 3.2.1.2 Participant's Security Deposit/Lodgment Representations The delivery of the Certificates for Security Deposit/Lodgment constitutes an unqualified representation and warranty by the Participant that: (a) the Beneficial Owner of the Securities intends to lodge the Securities into the Depository System; (b) the Participant and the Beneficial Owner of the Securities have, and can be presumed by SCCP to have, unconditionally acceded to the Depository Rules and unqualifiedly submitted to the Depository System; (c) the Certificates surrendered and the Securities represented thereby are Fungible, are not Defective Securities, are unencumbered, and are free from any third party claims whatsoever, and that any defect shall be rectified and/or indemnified by the Participant. The amount of indemnity for which the Participant may be held liable to SCCP under this clause shall be deemed to be an outstanding charge payable to SCCP that constitutes a first lien on all Cash Accounts and Bank Accounts of the Participant. 3.2.1.3 Acknowledgement and Confirmation Upon confirmation by the Transfer Agent that the Securities represented by the Certificates are not Defective Securities, the Securities lodged will be credited in the Securities Account of the Participant and shall be eligible for Transactions. The lodging and crediting of the Securities shall be irrevocable and subject to the terms of the written agreement executed by and among the Issuer of the Securities, the Transfer Agent, and SCCP. HaIATC 3.2.1.4 Suspension of Security Deposit/Lodgment The SCCP may, for reasonable cause, suspend or prohibit the Security Deposit/Lodgment of certain Securities in the Depository System. The decision to suspend or prohibit such security deposit/lodgment shall be final and not subject to appeal. SCCP shall make a notice available to all Participants regarding the suspension of such security deposit/lodgment via the official website. 3.2.2 Encumbrance of Participant's Securities Accounts In the event that SCCP is served notice of any attachment, injunction, sequestration order, levy, or any other involuntary lien (hereafter referred to as "encumbrance") over the Securities from any court, regulatory body (including the SRO to which the Participant belongs, if any), quasi-judicial body, or government agency of competent jurisdiction and authority, SCCP, being a depository whose role is to safekeep the Securities on behalf of the Beneficial Owner thereof, shall receive such notice of encumbrance and shall immediately notify the Participant of such encumbrance. SCCP shall immediately notify the CMIC and PSE or successor entities of the encumbrance over the Securities Account(s) for appropriate action. 3.2.3 Corporate Actions Unless provided for in specific procedures for corporate actions of shares lodged in the Depository System as may be amended from time to time, the following are the applicable rules: 3.2.3.1 Notice of Corporate Action SCCP shall, upon official receipt of the proper official notice from the Issuer or the PSE of any Corporate Action, promptly advise all Participants of the Corporate Action including its Record Date, Payment Date and other relevant data and send all proper documents in accordance with the Depository Operating Procedures. 3.2.3.2 Formula for Entitlements The amount of entitlement in respect of a Corporate Action shall be determined by SCCP based on the total number, as of Record Date, of the proper Securities registered in the name of SCCP Nominee Corp. and the number, as of Record Date, of the proper Equity Securities in the Securities Account of each Participant, as computed and confirmed by the Transfer Agent and reconciled by SCCP, rounded down to the nearest whole number or centavo as the case may be. Any excess cash and/or Securities as a result of the rounding off will go to SCCP as part of SCCP revenues. AIaSTE The Participant shall be responsible for determining and encoding into the Depository System the applicable tax rate for each client. 3.2.3.3 Shareholders Meetings In any meeting of an Issuer in which Security holders are entitled to vote, all Securities registered in the name of SCCP Nominee Corp. which are entitled to vote shall not be represented nor voted on by SCCP Nominee Corp. or SCCP. Instead, SCCP Nominee Corp. shall execute a proxy in favor of the Participants for the Securities in their Securities Account as of Record Date, without prejudice to the obligation of the Participants to promptly account to the Beneficial Owners of the Securities in the Participant's Client Securities Account in accordance with applicable regulations. 3.2.3.3.1 Participants who vote, intend to vote or execute further proxies on the Securities in the Participant's Client Securities Account warrant that each of them has obtained, and maintains on file the prior written authorization of the Beneficial Owners of the Securities to vote and/or execute further proxies on such Securities in accordance with applicable laws and regulations. 3.2.3.3.2 All proxies covering Securities in the Participant's Client Securities Account shall be accomplished, returned and delivered directly to the Corporate Secretary of the Issuer in accordance with applicable laws and regulations. 3.2.3.4 Mandatory Corporate Action Mandatory corporate actions include but are not limited to: (a) Cash Dividends All cash dividends pertaining to lodged Securities shall be paid and distributed through the Depository System by crediting the amount of such dividend in the Participant's Deposit Cash Account on payment date. (b) Stock Dividends All stock dividends pertaining to Securities in the Depository System shall be distributed through the Depository System by crediting the amount of such dividend in the Participant's Securities Accounts after confirmation by the Transfer Agent of the Stock Dividend listing date or payment date, whichever is later. DaScCH 3.2.3.5 Voluntary Corporate Action Voluntary corporate actions including but not limited to: (a) Exercise of rights (b) Bond conversion into new shares (c) Proxy voting shall be made available within the Depository System. Participants may enter the Instructions to respond to the corporate event. 3.2.3.6 Other Corporate Actions SCCP may from time to time provide for supplemental rules governing other types of Corporate Actions through the Depository Operating Procedures. 3.2.4 Security Withdrawal/Upliftment 3.2.4.1 Security Withdrawal/Upliftment Instruction A Participant intending to withdraw/uplift Securities from the Depository System shall enter a Security Withdrawal/Upliftment Instruction and send to the corresponding Transfer Agent a duly-signed Security Withdrawal/Upliftment Instruction, stating the kind, class and amount of Securities to be uplifted and indicating all the relevant details about the transferee of the Securities. Upon entry of the Security Withdrawal/Upliftment Instructions by the Participant, the Securities sought to be uplifted shall be frozen in the Participant's Securities Account and shall no longer be eligible for any Transaction through the Depository System. The Security Withdrawal/Upliftment Instruction may be cancelled by the Participant at any time prior to its confirmation by the Transfer Agent. 3.2.4.2 Liability for Failed Settlement A Participant requesting Security Withdrawal/Upliftment shall ensure that such Security Withdrawal/Upliftment will not result in the failure of Settlement of its relevant Transactions. 3.2.4.3 Effectivity of Security Withdrawal/Upliftment Upon confirmation of the Security Withdrawal/Upliftment Instructions by the Transfer Agent, the Securities shall be uplifted from the Depository System. The Transfer Agent shall debit the account of SCCP Nominee Corp. and credit the account of the Beneficial Owner in the Issuer's stock and transfer book. aDSHCc RULE 4 Settlement Service Rules 4.1 Settlement Service. 4.1.1 Settlement The Settlement Service includes the following: (a) Security Transfer (SECTRS) The Security Transfer facility shall allow the Participant to transfer securities between its Securities Accounts provided that the accounts are of the same type, except transfers between Client Sub-accounts. (b) Delivery Free of Payment/Receive Free of Payment (DFOP/RFOP) The DFOP/RFOP facility shall allow the Participants to transfer securities within its own Securities Accounts of different types or of different Client Sub-accounts or to transfer securities to another Participant. Settlement shall be on a trade-for-trade basis and the cash element shall be settled independently between the transacting parties. (c) Delivery versus Payment/Receive versus Payment (DVP/RVP) The DVP/RVP facility shall be a value for value Settlement of Transactions where the delivery of Securities shall be settled against the payment of cash. Settlement shall be on a trade-for-trade basis with final and irrevocable transfer of Securities occurring simultaneously with the transfer of funds. 4.1.2 Obligation of Participant The Participant shall ensure that there are sufficient Securities in the Securities Accounts of the transferor-Participant and sufficient cash in the Deposit Cash Account of the transferee-Participant upon Settlement in case of Delivery versus Payment, or that there are sufficient Securities in the Securities Accounts in case of Free of Payment. 4.1.3 Tax Clearances The Participant to DVP/RVP and DFOP/RFOP shall submit to SCCP on a monthly basis a written certification in a form prescribed by SCCP, signed by its authorized representative(s) or alternate(s), that there is no change in Beneficial Ownership or, where there is such a change, that all applicable taxes have been paid and corresponding tax clearances have been obtained. CSIcHA 4.1.4 Failed Transactions DFOP/RFOP and DVP/RVP Transactions which cannot be settled at the close of business on Settlement Date shall no longer be processed for settlement. 4.1.5 Effect of Settlement Upon Settlement of DFOP/RFOP and DVP/RVP Transactions, such Transactions shall be deemed final and irrevocable and no unwinding thereof shall be allowed notwithstanding any laws and regulations of general application relating to the matter. RULE 5 Risk Management Rule 5.1 Types of Risks. 5.1.1 Loss of Securities There is a "Loss of Securities" when the Depository is unable to deliver to a Participant any part of, or all Securities held by the Depository on its behalf while in the safekeeping of the Depository, or other instrument evidencing the Securities. 5.1.2 Defective Security Deposit/Lodgment There is "Defective Security Deposit/Lodgment" of Securities when it is declared by SCCP that: (a) the Security which is lodged in the Depository, after confirmation by the Transfer Agent, is a Defective Security; or (b) registration of the Security in the name of SCCP Nominee Corp. is or would be invalid, improper, defective, ineffective, wrongful, subject to any adverse claim or privilege, or cannot be effectively and rightfully transferred. Defective Security Deposit/Lodgment will be reversed by Uplifting the Defective Securities. In case the Defective Securities or a portion thereof has been used for settlement prior to receipt of notice of any defect, prohibition or restriction affecting the Securities, SCCP shall have no obligation to recover such Securities. The remaining balance of the Defective Securities in the Depository System shall be immediately segregated and delivered to the Transfer Agent of the Issuer concerned for proper disposition thereof in accordance with the final and/or executory order from the proper government agency or instrumentality. The Depository shall not accept any further security deposits/lodgments of the Defective Security. The Participant and the Transfer Agent shall inform the Depository of any developments on the Defective Securities, including their cancellation, attempts to lodge them, their transfer and other material events that could affect the Depository System, including acts performed to comply or attend to the orders of quasi-judicial and/or judicial bodies in respect of disputes affecting them. SCCP shall notify the Participants whose Securities have been declared defective. Further, SCCP shall make a notice available to all regarding the declaration of the Defective Securities via the official website. TaCDAH 5.1.3 System-Related Loss There is a "System-Related Loss" when a Participant suffers actual loss or damage due to an interruption, disruption, malfunction, or defect in the Depository System. 5.1.4 Operation-Related Loss There is an "Operation-Related Loss" when a Participant suffers actual loss or damage due to fraud, error or omission directly attributable to Depository or its duly authorized agents. 5.1.5 Counterparty Risk The failure of a Participant to meet any obligation to deliver the Security Element and/or the Cash Element of a Transaction due to its insolvency or illiquidity problems due to whatever cause is solely a "Counterparty Risk", for which Depository shall not in any way be liable. 5.1.6 Force Majeure The Depository shall not be liable in any way for whatever losses or damages may be suffered by any party which directly or indirectly was due to circumstances beyond the reasonable control of the Depository. Rule 5.2 Participant Warranty and Indemnity. 5.2.1 Participant Depository Warranty A Participant agrees and warrants that it shall indemnify and hold the Depository free and harmless from and against any loss, damage, cost, expense, liability or claim (including without limitation the cost of legal counsel to advise on or defend against such claims) that the Depository may incur arising from: (a) A Loss of Securities, System-Related Loss, or Operation-Related Loss, to the extent caused or contributed by any erroneous, negligent, wrongful, reckless, willful, fraudulent or dishonest act or omission of the Participant or of any of its directors, trustees, officers, partners, employees, contractors, agents or other privies; (b) Defective Security Deposit/Lodgment. 5.2.2 Participant Settlement Warranty A Participant shall hold the Depository as well as another Participant which is its counterparty in a Transaction free and harmless from and against any loss, damage, cost, expense, liability or claim (including cost of legal counsel) suffered arising from: (a) a Failed Trade due to the inability of the Participant to have sufficient Securities in its Securities Account and/or funds in its Cash Account and Bank Account on Settlement Date; (b) any erroneous, negligent, wrongful, reckless, willful, fraudulent or dishonest act or omission of the Participant or of any of its directors, trustees, officers, partners, employees, contractors, agents or other privies. 5.2.3 Other Indemnities SCCP shall be indemnified by the Participant for any loss, damage, cost, expense, liability or claim suffered by the former because of, without limitation: (a) The performance by SCCP of any act or procedure which it must or may perform under the Depository Rules or Depository Operating Procedures, including without limitation making corrections of any book-entry, transferring collateralized Securities, enforcing any lien on lodged Securities, debiting the Securities Accounts for Defective Security Deposit/Lodgment, freezing of a Securities Account, and otherwise; CASIEa (b) The inability of SCCP to effect a Security Deposit/Lodgment, transfer, collateralization, Security Withdrawal/Upliftment or other Transaction on its records to the extent that SCCP has taken reasonable corrective action or acted in accordance with the Depository Participantship Agreement; (c) Any calls, assessments, taxes (except for taxes in connection with the income of SCCP) and other governmental charges and any other expenses related to the ownership of Securities while lodged in the Depository System; (d) The reliance by SCCP upon any declaration, representation, warranty, information or documentation provided by a Participant; (e) Any breach of a Participant's obligations, representations or warranties. Rule 5.3 Depository Loss Indemnity. 5.3.1 Insurance SCCP shall maintain an insurance policy in such amounts and for such coverage as may be reasonably determined by the SCCP Board of Directors. The Participants shall be notified of any material reduction in the amount or coverage of the insurance. 5.3.2 Limitation of Participant Recovery The maximum total amount payable by SCCP to all Participants for a Systems-Related Loss or Operations-Related Loss, to the extent it was caused by the gross negligence, willful misconduct, fraud, or bad faith of SCCP, its directors, officers, employees or agents, shall be limited to actual damages or losses suffered by the Participant, and shall not exceed the net amount recovered by SCCP from the insurance policies or any other responsible Person in respect of the loss. If more than one Participant is affected by a loss, the amount recovered by SCCP from the insurance policies shall be proportionately distributed among the Participants. The amount payable by SCCP for any loss excludes indirect and consequential losses for which SCCP shall in no way be liable, whether or not the possibility of such loss was disclosed to or reasonably could have been foreseen by SCCP. SCCP,. The Participant shall not be entitled to recover moral, nominal, temperate or exemplary damages. 5.3.3 Exclusion of Liability The Depository, its directors, officers, shareholders, employees or agents, shall have no personal liability to a Participant for: SacTCA (a) any loss of opportunity, profit, market, goodwill, interest or use of money or Securities, or any other special, indirect or consequential loss, damage, cost, expense, liability or claim suffered or incurred by any Participant, and/or its clients, any Participant Loss or any Loss of Securities; or (b) any loss, damage, cost, expense, liability or claim suffered or incurred by a Participant and/or its clients, which arises from any action taken by the Depository in accordance with an order issued by a court or a regulatory authority having jurisdiction over the Depository, its Participants, Issuers and its agents and representatives. 5.3.4 Exclusive Liability The Depository shall not be liable for the performance of any function which is due to be performed by SCCP pursuant to its SCCP Settlement Rules. Neither shall the Depository be liable for any loss, damage, cost, expense and liability suffered by a Participant and/or its clients arising from the use of the SCCP System under its SCCP Settlement Rules. ANNEX B PROPOSED REVISED DEPOSITORY OPERATING PROCEDURES OF THE SECURITIES CLEARING CORPORATION OF THE PHILIPPINES AS APPROVED BY THE SCCP BOARD OF DIRECTORS October 15, 2012 TABLE OF CONTENTS 1.0 Rules 2.0 Services 3.0 Participation 3.1 Application 3.2 Review of Application 3.3 Approval 3.4 Suspension and Termination 3.5 Resignation 4.0 Securities Accounts cDTSHE 4.1 Maintenance and Access to the Securities Accounts 5.0 Creation of Sub-accounts 6.0 Security Deposit (Lodgment) and Withdrawal (Upliftment) of Securities 6.1 Participant Initiated Security Deposit/Lodgment 6.2 Transfer Agent Initiated Security Deposit/Lodgment 6.3 Defective Security 6.4 Security Withdrawal/Upliftment 6.5 Reconciliation of Balances 7.0 Security Transfer (SECTRS) 8.0 Delivery versus Payment and Receive versus Payment (DVP/RVP) 8.1 Delivery versus Payment (DVP) Instruction 8.2 Receive versus Payment (RVP) Instruction 8.3 Matching of DVP and RVP Instructions 8.4 Cancellation of DVP or RVP Instruction 8.5 Settlement of DVP/RVP Transaction 9.0 Delivery Free of Payment (DFOP)/Receive Free of Payment (RFOP) 9.1 DFOP Instruction 9.2 RFOP Instruction 9.3 Matching of DFOP and RFOP Instructions 9.4 Settlement of DFOP and RFOP Instructions 9.5 Cancellation of DFOP or RFOP Transaction 10.0 Corporate Actions 10.1 Processing of Mandatory Corporate Actions 10.2 Processing of Mandatory Corporate Actions with Options 10.3 Processing of Voluntary Corporate Actions 11.0 Generation of Reports 12.0 Risk Management 12.1 Loss of Securities 12.3 Systems-Related Loss 12.4 Operations-Related Loss 12.5 Encumbrance of Participant's Securities Account 12.6 Eligible Securities 12.8 Reportorial Requirements 12.9 Insurance Introduction 1.0 Rules These procedures were adopted under the Depository Rules of the Securities Clearing Corporation of the Philippines (SCCP) with respect to the services performed by SCCP. The terms used in these Procedures shall have the same definitions as they have in the Depository Rules. In the same manner, the terms used in any form, document, or report referred to herein shall have the same definition as they have in the Depository Rules and these Procedures. CAHTIS 2.0 Services SCCP shall provide services to the Participants as defined in Rule 1.5 of the Depository Rules. 3.0 Participation 3.1 Application 3.1.1 An applicant shall duly accomplish and deliver to SCCP the following documents: 3.1.1.1 For Corporations: (a) Letter of Intent (b) Duly executed Secretary's Certificate authorizing the Company to apply as a Depository Participant of SCCP and indicating the Company's Authorized Signatories (c) Articles of Incorporation and By-laws (d) Depository Participant Information Form (e) Such other documents as may be required by SCCP 3.1.1.2 For Individuals: (a) Letter of Intent signed by the applicant or authorized representative (b) Special Power of Attorney in favor of the authorized representative (if applicable) (c) Depository Participant Information Form (d) Such other documents as may be required by SCCP 3.2 Review of Application 3.2.1 SCCP shall review the documents submitted by the applicant within twenty (20) business days from date of submission of the complete set of application documents. 3.2.2 SCCP may deny the application outright for failure by the applicant to submit all the proper information and documents required by SCCP. SCCP may, depending on the nature and gravity of the deficiency as determined by SCCP, allow the applicant to correct the deficiency within fifteen (15) days from receipt of notice from SCCP. 3.2.3 SCCP shall deem the application as abandoned if the applicant fails to sufficiently correct its deficiencies during the period. On the other hand, SCCP shall deem the application to be amended if the applicant submits the required information or correct its deficiencies during the period. SAHEIc 3.2.4 SCCP shall automatically reject or disqualify the application upon knowledge of any misleading information by or misrepresentation on the part of the applicant prior to or after the approval of the application. 3.3 Approval 3.3.1 SCCP shall immediately notify the applicant once the application is approved. The applicant, upon receipt of such notice, shall within thirty (30) calendar days execute and submit to SCCP at least two (2) notarized originals of the Depository Participantship Master Agreement. 3.3.2 SCCP shall deem the application withdrawn, and the approval deemed ineffective, if the applicant fails to execute and submit the Depository Participantship Master Agreement within thirty (30) calendar days. 3.4 Suspension and Termination 3.4.1 In the event that a Participant was suspended or terminated under Rule 2.6 of the Depository Rules, SCCP shall immediately restrict the access of the Participant to the Depository System and shall notify the Participant in writing, as soon as practicable, of the basis for imposing the restriction. If the Participant is suspended under Rule 2.6.1.d (take-over of the Participant's operations pursuant to the SRC and its Rules) or Rule 2.6.1.e (revocation of the registration or license, or suspension, or expulsion of the Participant by any regulatory or competent authority having jurisdiction over it, including the SRO to which the Participant belongs, if any) then such suspension shall remain in effect until such time as the SRO or entity exercising jurisdiction over the Participant notifies SCCP that it is returning control over the Participant's operations or is lifting the suspension, as the case may be. In either case, SCCP shall abide by instructions from the SRO or entity exercising jurisdiction over the Participant for the duration of the suspension. 3.4.2 In the event of takeover, SCCP shall, upon receipt of official notice, grant access to and allow the entity that took over the operations of the Participant to execute transactions in behalf of the latter. 3.4.3 SCCP shall publish the notice of suspension or termination and takeover via the official website. 3.5 Resignation 3.5.1 The Participant shall submit to the SCCP President a written notice of its intention to resign, signed by the Participant's nominee or its authorized representative, at least one (1) month prior to the intended date of resignation. 3.5.2 Upon receipt of the resignation notice, SCCP shall inform the Participant of any outstanding Depository-related charges that need to be settled. The amount of outstanding dues as of the intended date of resignation shall be computed by SCCP. 3.5.3 The Participant shall pay its outstanding Depository-related charges prior to the intended date of resignation. 3.5.4 Upon assessment, SCCP may oblige the Participant to submit the following requirements, but not limited to: DIcSHE (a) Letter of credit (b) Bank guarantee issued by a bank acceptable by SCCP 3.5.5 SCCP shall notify the Participant of the compliance to the requirements and the acceptance of the resignation on or after the intended date. 3.5.6 SCCP shall notify the public of the Participant's resignation via the official website. 4.0 Securities Accounts 4.1 Maintenance and Access to the Securities Accounts 4.1.1 Each Participant shall have the following depository accounts in the Depository System: (a) Deposit Account (b) Delivery/Receive Account (for clearing purposes) (c) Collateral Account (d) Securities Borrowing and Lending (SBL) Account 4.1.2 Participants may properly segregate the Securities of their clients in the Client Sub-account under the Deposit Account; and each Client Sub-account shall be given an account code that identifies the true beneficial owner of the securities contained in such Sub-account. Such Client Sub-account should be identified with the Client to which the beneficial ownership of such Securities belongs. 4.1.3 Clients may inquire from the Participant such information pertaining to its Sub-account, and the Participant shall provide the clients the relevant Statement of Accounts generated in the Depository System. 4.1.4 Clients may inquire information regarding their Sub-accounts from SCCP. For this purpose, the following procedure shall be followed: 4.1.4.1 The Client requesting information shall accomplish the proper request form that may be accessed from the SCCP website. Once the form is duly accomplished, the Participant shall automatically receive a copy of the Client request. 4.1.4.2 The Participant shall verify the identity of the Client. Once verified, the Participant shall send SCCP the certification, which may be accessed from the SCCP website, via electronic form with copy furnished the client. acSECT 4.1.4.3 Upon receipt of the certification from the Participant, SCCP shall send the information requested to the designated email account of the requesting Client in electronic form. 4.1.4.4 In the event that the Participant fails to issue the certification, SCCP shall generate an incident report and submit such report to CMIC or its successor for its appropriate action. 4.1.5 Participants shall maintain the Securities of the clients opting not to open a Client Sub-account in the Omnibus Client Sub-account, classified as either Local or Foreign. Participants shall maintain the Securities of clients with Filipino nationality in the Local Omnibus Client Sub-account. In the same manner, Participants shall maintain the Securities of clients with foreign nationality in the Foreign Omnibus Client Sub-account. 4.1.6 Participants shall maintain their own Securities in the Proprietary Sub-account, classified as either Foreign or Local. Participants with Filipino nationality shall maintain their own Securities in the Local Proprietary Sub-account. In the same manner, Participants with foreign nationality shall maintain their Securities in the Foreign Proprietary Sub-account. 4.1.7 Participants shall deposit the Securities assigned as collateral to SCCP in the Collateral Account of the Depository System. Management of this account shall be subject to Rule 8 of the SCCP Rules on Clearing and Settlement as well as the SCCP Rules on Securities Borrowing and Lending. 4.1.8 Participants participating as Lenders in the SBL program of SCCP shall transfer the Securities available for lending in the SBL account of the Depository System. Management of this account shall be subject to the SCCP Rules on Securities Borrowing and Lending. 5.0 Creation of Sub-accounts 5.1 SCCP shall require the Participants to submit the accomplished and duly notarized form for the creation of Client Sub-accounts. Participants are required to submit a list of their existing Client codes in excel or text file format. SCCP shall generate a corresponding CCCS Sub-account for each Client code and provide the Participants with the corresponding CCCS Client Sub-account codes. Thereafter, the Participant shall submit to SCCP a list of new Client codes for the creation of Sub-accounts. 5.2 Participants shall map the Client codes in their back-office systems with the CCCS Client Sub-account codes for proper recording and correct execution of CCCS security transfers. 5.3 Effect of Client Sub-accounts on CCCS File Upload Procedures Participants opting to use the CCCS File Upload facility shall ensure that their back-office systems are capable of handling Client-level security transfers. 6.0 Security Deposit (Lodgment) and Withdrawal (Upliftment) of Securities In compliance with Section 43 of the Securities Regulation Code, as well as the Amended Rule on Lodgment of Securities of the PSE Issuer Regulation Division, the Transfer Agent shall no longer issue a jumbo or mother certificate in the name of SCCP Nominee Corporation. Instead, the Transfer Agent shall issue SCCP a Registry Confirmation Advice to serve as final and irrevocable evidence of shares that have been credited to the account of SCCP Nominee Corp. 6.1 Participant Initiated Security Deposit/Lodgment 6.1.1 The owner of the security, as the Client of the Participant, shall deliver the physical certificate to the Participant for Security Deposit/Lodgment. 6.1.2 The Participant shall create a Security Deposit instruction in the Depository System corresponding to the instruction of the Client. The Participant shall generate the Security Deposit/Lodgment Request Form through the System. aDHCcE 6.1.3 A Security Deposit instruction that is successfully validated by the System shall have the status "waiting for confirmation". There shall be no credit of securities in the Participant's Securities Account pending the Deposit Confirmation of the Transfer Agent. 6.1.4 The Participant shall deliver the certificate together with the Security Deposit/Lodgment Request Form to the Transfer Agent for processing. The Transfer Agent shall validate the certificate and time stamp receipt of the certificate delivered by the Participant. 6.1.5 The Participant may inquire regarding the status of its Security Deposit instruction through the Depository System and may generate reports from the Depository System to monitor the progress of its deposit transaction. The Participant may call the attention of the Transfer Agent in the event of delay or erroneous processing of its deposit transaction. 6.1.6 Upon successful validation of the certificate, the Transfer Agent shall credit the account of the SCCP Nominee Corporation corresponding to the number of shares deposited/lodged and issue a Registry Confirmation Advice to SCCP. The Transfer Agent shall confirm the Security Deposit instruction of the Participant via a Deposit Confirmation Instruction in the Depository System. The information contained in the Deposit Confirmation instruction must correspond with the information contained in the Security Deposit instruction of the Participant. 6.1.7 Upon settlement of the Deposit Confirmation instruction, the updated securities position shall be made available in the designated Securities account of the Participant. 6.2 Transfer Agent Initiated Security Deposit/Lodgment 6.2.1 The Transfer Agent Initiated Security Deposit/Lodgment is a facility for the Transfer Agents to credit the shares of the Participant as a result of the Participant or its clients' IPO subscription, rights subscription, stock dividends, or direct request from shareholder, among others. 6.2.2 The Transfer Agent shall credit the account of the SCCP Nominee Corporation corresponding to the number of shares to be credited to the designated Participant and issue a Registry Confirmation Advice to SCCP. The Transfer Agent shall create a Deposit Confirmation instruction which shall include the identification of the designated Securities Account of the Participant in which the Securities are to be credited. 6.2.3 Upon settlement of the Deposit Confirmation instruction, the updated securities position shall be made available in the designated Securities account of the Participant. 6.3 Defective Security 6.3.1 In the event that the Securities lodged in the Depository are considered defective as defined in Section 5.1.2 of the Depository Rules, SCCP shall immediately temporarily freeze all shares of the Issuer, which belong to the particular class of the defective security, in the Depository System, pending the determination of the exact number of Defective Securities in its custody. 6.3.2 SCCP shall notify the PSE, CMIC, SEC and the public of its decision to freeze all the shares of the Issuer which belong to the particular class of the Defective Security. 6.3.3 SCCP shall, in close coordination with CMIC, determine the exact number of Defective Securities remaining in the Depository. 6.3.4 Upon ascertaining the exact number of Defective Securities remaining in the Depository, SCCP shall execute a debit/credit memo on the Securities Accounts of the affected Participants in the Depository System and instruct the Transfer Agent of the Issuer concerned to debit in its stock and transfer book the corresponding number of shares in the name of SCCP Nominee Corp. DHSCTI 6.3.5 SCCP shall then advice the concerned Participants regarding the Upliftment of the Defective Securities. 6.3.6 Once the defective Securities have been Uplifted and debited from SCCP Nominee Corp., SCCP shall lift the freeze order on the class of shares to which the Defective Securities belong and notify PSE, CMIC, SEC and the public accordingly. 6.4 Security Withdrawal/Upliftment 6.4.1 The Participant may withdraw the Securities from the Depository System at any time provided that the Participant's Securities Accounts are not blocked or subject to any restrictions. The withdrawal process shall be initiated by the Participant. 6.4.2 For this purpose, the Participant shall create a Security Withdrawal instruction. The Security Withdrawal instruction shall contain the exact name, nationality, and the tax identification number of the beneficial owner. 6.4.3 The Depository System shall reject the withdrawal request of the Participant if the balance in its Securities Account is insufficient. 6.4.4 If there are sufficient balances in the Participant's Securities Account, the Depository System shall earmark the amount of securities to be withdrawn as specified in the Security Withdrawal instruction, and the corresponding withdrawn position will no longer be accessible to the Participant. The status of the Participant's Security Withdrawal instruction shall be "waiting for confirmation". 6.4.5 The Participant shall generate the Security Withdrawal/Upliftment Form through the Depository System and shall immediately and unconditionally deliver the same together with any required supporting document(s) to the Transfer Agent. 6.4.6 SCCP shall rely on the verification by the Transfer Agent of the documents submitted by the Participant with the details of its Security Withdrawal instruction. Upon verification, the Transfer Agent shall register the withdrawal in its system by debiting the shares from the account of SCCP Nominee Corporation. 6.4.7 The Transfer Agent shall confirm to SCCP the withdrawal of securities from its system through the Withdrawal Confirmation instruction in the Depository System. Upon receipt of the Withdrawal Confirmation instruction, the withdrawn securities shall no longer be considered in the ledgers of SCCP for the purpose of entitlements. 6.4.8 The Participant may inquire on the status of its Security Withdrawal instruction through the Depository System. Upon successful withdrawal, the Transfer Agent shall issue a new certificate to the Participant. Any delay on the release of the certificates shall be the liability of the Transfer Agent. 6.4.9 Settlement of the Security Withdrawal/Upliftment request may become unsuccessful if the Participant's Securities Account or the Security concerned became "blocked for closure" while the request is in the "waiting for confirmation" status. 6.5 Reconciliation of Balances 6.5.1 SCCP shall reconcile with the Transfer Agent the end-of-day balance of the SCCP Nominee Corporation on a daily basis thru electronic or other means. 7.0 Security Transfer (SECTRS) A Security Transfer (SECTRS) instruction is a single-sided instruction which shall not require matching. The Participant shall use the Security Transfer facility to transfer securities between its Securities Accounts provided that the accounts are of the same type, except transfers between Client Sub-accounts. 7.1 The Transfer of Securities from Client Sub-account to the Omnibus Sub-account and vice-versa shall be carried out through SECTRS instruction. 7.2 A SECTRS instruction that has been successfully validated shall have the status "ready for positioning" and shall be processed on the specified settlement date. 7.3 Only SECTRS instructions with successful positioning shall be settled by the system and the transfer of securities shall be final and irrevocable. 7.4 Insufficient Securities in the designated Source Account of the Participant shall cause the SECTRS instruction to fail. The status of the SECTRS instruction shall be "failed". 7.5 The system shall perform an intra-day recycling of failed SECTRS instruction until the cut-off time of 7:00 PM of the same day. 7.6 Participants with failed SECTRS instructions shall be notified by SCCP through the message board of the Depository System. The message shall indicate the instruction reference and the cause of fail. 7.7 Beyond the cut-off time of the intra-day recycling, any SECTRS instruction having a "failed" status shall be converted to status "overdue" and shall no longer be eligible for processing permanently, without prejudice to the Participant entering a new instruction. 8.0 Delivery versus Payment and Receive versus Payment (DVP/RVP) The Delivery versus Payment and Receive versus Payment (DVP/RVP) is a value for value Real Time Gross Settlement of transactions where Securities delivery cannot take place without the corresponding payment and vice-versa. Final and irrevocable transfer of securities occurs simultaneously with the transfer of funds. DVP/RVP instructions require matching. If the matching counterparty instruction is not yet present, the status is updated to "unmatched". If it remains unmatched after the specified Settlement Date, it becomes "overdue". In case the counterparty instruction is present, a transaction is created and linked to the matching instruction both with status "ready for positioning". 8.1 Delivery versus Payment (DVP) Instruction 8.1.1 The Participant shall use the DVP instruction for the delivery of securities against payment of cash by his counterparty to the transaction. The Participant, as the Seller, shall enter his delivery instruction and indicate the details of the trade. 8.1.2 A DVP instruction must be successfully validated for it to be matched by the system with its counterpart RVP instruction. A DVP instruction with validation error shall be rejected by the system and shall have the status "rejected". Successfully validated DVP instruction shall have the status "validated". 8.1.3 A DVP instruction with the status "validated" shall be matched by the system with its corresponding RVP instruction. cHCIDE 8.2 Receive versus Payment (RVP) Instruction 8.2.1 The Participant shall use RVP instruction for payment of cash against receipt of securities from its counterparty to the transaction. The Participant, as the Buyer, shall enter its receipt instruction and indicate the details of the trade. 8.2.2 An RVP instruction must be successfully validated for it to be matched by the system with its counterpart DVP instruction. An RVP instruction with validation error shall be rejected by the system and shall have the status "rejected", otherwise, such instruction shall have the status "validated". 8.2.3 An RVP instruction in the status "validated" shall be matched by the system with its corresponding DVP instruction. 8.3 Matching of DVP and RVP Instructions 8.3.1 The system shall match the DVP instruction entered by the Seller and the RVP instruction entered by the Buyer through the pre-defined matching fields that would identify and link the instructions. The pre-defined matching fields are as follows: Settlement information fields: (a) Participant Code (b) Counterpart Code aITECA (c) Instruction type; e.g. , a DVP instruction has to match with an RVP instruction. (d) Security Code (e) Security Quantity (f) Trade Date (g) Settlement Date (h) Settlement Amount (i) Currency Code (j) Code Reason (k) BIC Participant (l) BIC Counterparty 8.3.2 The matching process shall be in real-time and shall be initiated upon the successful validation of the DVP and RVP instructions. 8.3.3 If the DVP instruction matches with a corresponding RVP instruction, or vice versa, both instructions shall have the status "ready for positioning". 8.3.4 A DVP or RVP instruction with no corresponding RVP or DVP instruction shall have the status "unmatched". 8.3.5 Participant may inquire through the Depository System regarding the status of the DVP or RVP instruction at any time of the Business day. 8.3.6 If the instruction is still unmatched at the end of the day, both the Participant and its Counterparty specified in the instruction shall be notified via the System Message Board of the unmatched status of the instruction concerned. 8.3.7 At the end of the specified Settlement Date, any unmatched DVP or RVP instruction shall be considered "overdue" and will no longer be eligible for matching and will be considered permanently invalid for processing, without prejudice to the Participant entering a new instruction. AScTaD 8.4 Cancellation of DVP or RVP Instruction 8.4.1 Participant may unilaterally cancel DVP or RVP instruction only when such instruction remains under the "unmatched" status. 8.4.2 Unilateral cancellation of a DVP or RVP instruction in a "matched" status shall not be allowed. The matching process of the system shall be binding upon the Participants. 8.4.3 A DVP or RVP instruction in a "matched" status may be cancelled only by mutual agreement of the parties, through bilateral cancellation, where both parties must confirm the cancellation of the trade. 8.4.4 A DVP or RVP instruction which has already been validated and matched by the system and is under "ready for positioning" status may only be cancelled bilaterally. 8.4.5 A DVP or RVP instruction under "failed" status will still be processed by the intra-day recycling of the system but may be cancelled bilaterally. Beyond the cut-off time of the intra-day recycling, the DVP and RVP instruction shall have the status "overdue" and shall no longer be processed permanently, without prejudice to the Participant entering a new instruction. 8.4.6 A DVP or RVP instruction in final state such as "settled", "cancelled", or "overdue" shall not be cancellable. 8.5 Settlement of DVP/RVP Transaction 8.5.1 The DVP/RVP transaction shall be processed on the indicated Settlement Date. 8.5.2 Only DVP and RVP instructions successfully validated, matched and having the status "ready for positioning" will be processed for settlement. 8.5.3 DVP/RVP transaction with successful positioning of cash and Securities shall be settled by the Depository System and the corresponding transfer of cash and Securities between the Buyer and Seller shall be final and irrevocable. 8.5.4 Insufficient Securities in the designated Securities Account of the Seller shall cause the DVP/RVP transaction to fail. The status of the DVP and RVP instructions shall be "failed". 8.5.5 Insufficient cash in the designated Cash Account of the Buyer shall cause the DVP/RVP transaction to fail. The status of the DVP and RVP instructions shall be "failed". 8.5.6 The system shall perform an intra-day recycling of failed DVP/RVP transaction until the cut-off time of 7:00 PM of the same day. 8.5.7 At end-of-day, Participants with failed DVP and RVP instructions shall be notified by SCCP through the message board of the Depository System. The message shall indicate the instruction reference and the cause of fail. 8.5.8 Beyond the cut-off time of the intra-day recycling, any DVP and RVP instructions having a "failed" status shall be converted to status "overdue" and shall no longer be eligible for processing permanently, without prejudice to the Participant entering a new instruction. 8.5.9 The Participant shall be responsible for ensuring that the appropriate tax is paid, where applicable. 9.0 Delivery Free of Payment (DFOP)/Receive Free of Payment (RFOP) DFOP/RFOP can be used by Participants to move Securities from the seller's account to the buyer's account. CAHTIS Settlement of DFOP/RFOP instructions involves validation, matching and positioning of the trade. A trade is based on a message from a Participant. Before a trade can exist in the system, it will have to be authenticated and validated. Validation error leads to immediate "rejection" of the message. If no problems occur, the instruction will be created with the state "validated". DFOP/RFOP instructions require matching. If the matching counterparty instruction is not yet present, the status is updated to "unmatched". If it remains unmatched after the specified Settlement Date, it becomes "overdue". In case the counterparty instruction is present, a transaction is created and linked to the matching instruction both with status "ready for positioning". The following shall be carried out through DFOP/RFOP transaction: (a) Broker to Broker transfer of Securities for done-through and No Change of Beneficial Owner (NCBO) transaction; or (b) Broker to Custodian transfer of Securities; or (c) Broker to other Participant transfer of Securities for delivery of settled transaction; or (d) Bilateral Securities Borrowing and Lending (SBL) transaction; or (e) Settlement of Block Sale or done-through transaction whereby both parties agree to settle cash element outside the system; or (f) Such other transaction as may be reasonably allowed by SCCP. The DFOP and RFOP instructions are bilateral requests wherein the Participant delivering the Securities shall be required to execute a DFOP instruction and the counterparty to the transaction shall be required to execute an RFOP instruction before the system validates and matches the instructions. The Participant shall be responsible for ensuring that the appropriate tax is paid, where applicable. 9.1 DFOP Instruction 9.1.1 A Participant transferring Securities shall be the Seller entering a DFOP instruction. 9.1.2 A Participant as the Seller shall indicate in its DFOP instruction the details of the trade. 9.1.3 The DFOP instruction must be successfully validated for it to be matched by the system with its counterpart RFOP instruction. 9.2 RFOP Instruction 9.2.1 The Participant receiving the Securities shall be the Buyer entering an RFOP instruction. 9.2.2 A Participant as the Buyer shall indicate in its RFOP instruction the details of the trade. 9.2.3 The RFOP instruction must be successfully validated in order for it to be matched by the system with its counterpart DFOP instruction. 9.3 Matching of DFOP and RFOP Instructions 9.3.1 The system shall match the DFOP instruction entered by the Seller and the RFOP instruction entered by the Buyer through the pre-defined matching fields that would identify and link the instructions. The pre-defined matching fields shall be as follows: Settlement information fields: (a) Participant Code STaAcC (b) Counterpart Code (c) Instruction type; e.g., a DFOP instruction has to match with an RFOP instruction. (d) Security Code (e) Security Quantity (f) Trade Date (g) Settlement Date (h) Code Reason (i) BIC Participant (j) BIC Counterparty 9.3.2 The matching process shall be in real-time and shall be initiated upon the receipt of successfully validated DFOP and RFOP instructions. 9.3.3 If the DFOP instruction matches with a corresponding RFOP instruction, or vice versa, both instructions shall have the status "ready for positioning". 9.3.4 A DFOP or RFOP instruction with no corresponding RFOP or DFOP instruction shall have the status "unmatched". 9.3.5 Participant may inquire through the Depository System regarding the status of the DFOP or RFOP instruction at any time of the Business Day. 9.3.6 If the instruction is still unmatched at the end of the Business Day, both the Participant and the Counterparty specified in the instruction shall be notified via the System Message Board of the unmatched status of the instruction concerned. 9.3.7 At the end of the specified Settlement Date, any unmatched DFOP or RFOP instruction shall be considered "overdue" and will no longer be eligible for matching permanently, without prejudice to the Participant entering a new instruction. 9.4 Settlement of DFOP and RFOP Instructions 9.4.1 A DFOP/RFOP transaction shall be processed on the indicated Settlement Date. 9.4.2 Only DFOP and RFOP instructions with successful positioning shall be settled by the system and transfer of Securities shall be final and irrevocable. 9.4.3 Insufficient Securities in the designated Securities Account of the Seller shall cause the DFOP/RFOP transaction to fail. The status of the DFOP and RFOP instructions shall be "failed". 9.4.4 The system shall perform an intra-day recycling of failed DFOP/RFOP transactions until the cut-off time of 7:00 PM of the same day. IHCESD 9.4.5 At end-of-day, Participants with failed DFOP and RFOP instructions shall be notified by SCCP through the message board of the Depository System. The message shall indicate the instruction reference and the cause of fail. 9.4.6 Beyond the cut-off time of the intra-day recycling, any DFOP and RFOP instructions having a "failed" status shall be converted to status "overdue" and shall no longer be eligible for processing permanently, without prejudice to the Participant entering a new instruction. 9.5 Cancellation of DFOP or RFOP Transaction 9.5.1 Participants may unilaterally cancel DFOP or RFOP instructions only when such instructions remain in the "unmatched" status. 9.5.2 Unilateral cancellation of a DFOP or RFOP instruction in a "matched" status shall not be allowed. The matching process of the Depository System shall be binding upon the Participants. 9.5.3 A DFOP or RFOP instruction in a "matched" status may be cancelled only by mutual agreement of the parties, through bilateral cancellation, where both parties must confirm the cancellation of the trade. 9.5.4 A DFOP or RFOP instruction which has already been validated and matched by the Depository System and is under "ready for positioning" status may only be cancelled bilaterally. 9.5.5 A DFOP or RFOP instruction under "failed" status will still be processed by the intra-day recycling of the Depository System but may be cancelled bilaterally. Beyond the cut-off time of the intra-day recycling, SCCP shall no longer process the transaction and the DFOP and RFOP instructions shall permanently have the status "overdue", without prejudice to the Participant entering a new instruction. 9.5.6 A DFOP or RFOP instruction in final state such as "settled", "cancelled", or "overdue" shall not be cancellable. 10.0 Corporate Actions 10.1 Processing of Mandatory Corporate Actions 10.1.1 SCCP shall process Mandatory Corporate Actions which include, but are not necessarily limited to the following: (a) Cash dividend (b) Stock dividend (stock bonus) (c) Mixed cash and stock dividend (d) Rights distribution (e) Stock Split and Reverse Stock Split aTEHIC 10.1.2 Upon receipt of confirmation from the Issuer regarding a corporate action, SCCP shall enter the details pertaining to the corporate action event in the Depository System. 10.1.3 SCCP shall immediately notify the Participants through the messaging facility of the Depository System of the upcoming corporate event. 10.1.4 On Record Date, the Depository System shall calculate the security balances and entitlements. The Participant may generate the Entitlements Report via the Depository System. Likewise, the Transfer Agent may generate the Entitlements Summary Report via the Depository System. 10.1.5 One Business Day prior to Payment Date, SCCP shall create settlement instructions based upon the calculated entitlements. 10.1.6 On Payment Date, SCCP shall distribute the proceeds from the Transfer Agent's pertinent account to the Participants' accounts in the Depository System subject to the availability of cash and securities in the Transfer Agent's accounts. 10.1.7 The Participants shall be responsible for determining and encoding into the Depository System the applicable tax rate for each client. 10.2 Processing of Mandatory Corporate Actions with Options 10.2.1 SCCP shall process Mandatory Corporate Actions with Options which shall include but not limited to the following: (a) Choice dividend (b) Conversion option 10.2.2 Prior to the Announcement Date, SCCP shall enter the details pertaining to the Corporate Action in the Depository System. 10.2.3 On the Announcement Date, SCCP shall provide a report to all Participants, automatically distributed via the Participant's workstation, announcing the upcoming Corporate Action. 10.2.4 On Record Date, the system shall calculate the Security balances and entitlements of all Participants. The Participant may generate the Entitlements Report via the Depository System. Likewise, the Transfer Agent may generate the Entitlements Summary Report via the Depository System. 10.2.5 Upon the release of the summary of entitlements, Participants shall be allowed to indicate their preference for the proceeds by entering the appropriate instruction in the Depository System. 10.2.6 One Business Day prior to the Payment Date or at the end-of-day process, settlement instructions are created based upon the calculated entitlement, to distribute the proceeds from the Transfer Agent's pertinent account to the accounts of the Participants. 10.2.7 The Transfer Agent shall ensure that sufficient cash is deposited in its Cash Account with the payment bank or sufficient Securities are deposited in its Deposit Account in the Depository System. 10.2.8 On Payment Date, SCCP shall distribute the proceeds from the Transfer Agent's pertinent account to the Participants' accounts in the Depository System subject to the availability of cash and Securities in the Transfer Agent's account. 10.2.9 The Participant shall be responsible for determining and encoding into the Depository System the applicable tax rate for each client. 10.3 Processing of Voluntary Corporate Actions 10.3.1 SCCP shall process Voluntary Corporate Actions which shall include, but are not necessarily limited to, the following: CSHEAI (a) Exercise of rights (b) Bond conversion into new shares (c) Subscription Exercise (Initial Public Offering (IPO), via delivery of allotment rights) (d) Proxy voting (invitation distribution to the general meeting) 10.3.2 Upon receipt of confirmation from the Issuer regarding a Corporate Action, SCCP shall enter the details pertaining to the Corporate Action in the Depository system. 10.3.3 SCCP shall immediately notify the Participants through the messaging facility of the Depository System of the upcoming Corporate Action. 10.3.4 During the subscription period, the Participant shall enter its instructions in the Depository System in response to the Corporate Action. 10.3.5 For the voluntary Corporate Actions, the Participants may enter a subscription instruction to indicate the number of shares to which it wishes to subscribe. Upon successful validation of the Voluntary Corporate Action Subscription instruction, the allocation of the exercise instrument shall immediately take place. 10.3.6 On Payment Date, the proceeds will be distributed in the manner defined in the Corporate Action. 11.0 Generation of Reports 11.1 SCCP shall provide the Participants access to the Depository System so that they may generate reports as may be necessary in the course of business. 11.2 Participants shall be responsible for generating the necessary reports for record purposes and for providing their clients with the same. 11.0 n Risk Management 11.1 Loss of Securities 11.1.1 Definition (Rule 5.1.1) There is a "Loss of Securities" when the Depository is unable to deliver to a Participant any part of, or all Securities held by the Depository on its behalf while in the safekeeping of the Depository, or other instrument evidencing the Securities. 11.1.2 Controls 11.1.2.1 The Depository shall ensure that there is no damage or loss of the entered data, and that the main and historical database is constantly available to the employees and Participants in the operations of the Depository. Historical data in excess of 3 months shall be available to Participants only upon prior written request. 11.1.2.2 In order to prevent illegal and unauthorized changes of the data in the accounts it maintains during the operations of the Depository, SCCP shall undertake the following measures: (a) Require each Participant to designate a user administrator who shall be responsible for Participant's access to and use of the system including, but not limited to, the creation of User IDs, assignment of authorized users, and the creation, deletion, and modification of passwords. Participant shall immediately notify SCCP in writing of any change in the User Administrator. HICcSA The Participant shall be responsible for securing its password, key file, any other access information, and accounts and for maintaining the security and integrity of its systems, processes and procedures. (b) Ensure that the Depository employees shall act only within their authorized competencies. (c) Perform a daily check of the securities database balance and the accounts database. (d) Make available daily records of all transactions, i.e. , changes of the holders' accounts and issues, as well as evidence for all the changes made within the Depository, allowing the possibility for reconstruction of all activities of the Depository. (e) Perform end-of-day reconciliation of balances with the Transfer Agents on a daily basis. 12.2 Defective Security Deposit/Lodgment (DOP 6.3) 12.3 Systems-Related Loss 12.3.1 Definition Loss arising from interruptions, disruptions, malfunctions or defects in the Depository System. (Rule 5.1.3) 12.3.2 Controls 12.3.2.1 In order to prevent system malfunction, during the operations of the Depository, SCCP shall undertake the following measures: HADTEC (a) SCCP shall have a working Business Continuity and Disaster Recovery Plan in place to be tested periodically, in order to ensure the continuity of its operations and services. The Chief Operating Officer will determine the frequency of the testing and should ensure strict adherence thereto. (b) Ensure that the Depository employees shall act only within their authorized functions. (c) Conduct regular system maintenance and performance assessment. (d) Engage an independent party to conduct systems audit. 12.3.2.2 Make available daily records of all transactions, i.e. , changes of the holders' accounts and issues, as well as evidence for all the changes made within the Depository, allowing the possibility for reconstruction of all activities in the Depository System. 12.4 Operations-Related Loss 12.4.1 Definition Loss arising from fraud, error, or omission directly attributable to SCCP or its duly authorized agents. (Rule 5.1.4) 12.4.2 Controls 12.4.2.1 In order to prevent operations-related loss, SCCP shall undertake the following measures: (a) Ensure that the Depository employees shall act only within their authorized functions. (b) Ensure that the Depository employees are knowledgeable of the Depository Rules and Depository Operating Procedures. (c) Conduct spot review of system users, their access right and system activities. (d) Engage an independent party to conduct operations audit. (e) Implement a 4-eye (maker-approver) authorization level and approval process. 12.4.2.2 Make available daily records of all transactions, i.e. , changes of the holders' accounts and issues, as well as evidence for all the changes made within the Depository, allowing the possibility for reconstruction of all activities in the Depository System. 12.5 Encumbrance of Participant's Securities Account 12.5.1 Upon receipt by SCCP of notice that the assets of a Participant are subject to encumbrances as defined in Section 3.2.2 of the Rules, SCCP shall immediately restrict the access of said Participant in the Depository System. 12.5.2 SCCP shall immediately notify the Participant and the entity having jurisdiction over it of the notice of encumbrance. 12.5.3 SCCP shall, upon receipt of takeover notice, grant access to and allow the entity that took over the operations of the Participant to execute transactions in behalf of the latter. 12.5.4 SCCP shall publish the notice of encumbrance of Participant's Securities Accounts and takeover via the official website. 12.5.6 SCCP shall restore Participant's access to the Depository System upon receipt of the notice of the lifting of the encumbrance. 12.6 Eligible Securities 12.6.1 Eligibility of Securities HSCATc SCCP shall have criteria on the eligibility of Securities to be deposited and maintained in the Depository System. Refusal of SCCP to accept Securities as eligible shall be defined under Section 1.6.2 of the Rules. 12.6.2 Suspension of Securities SCCP may discontinue the eligibility of any Security previously accepted as eligible based on grounds set forth in Section 1.6.2 of the Rules. Furthermore, any Security which was accepted by SCCP as an eligible Security, but which was subsequently deemed ineligible, shall be kept in the SCCP Depository system for safekeeping until further notice, subject to certification by the Participant that all taxes applicable for transfers between or among Participants' accounts have been paid. 12.7 Notification Prior to imposing or removing conditions on any Security: 12.7.1 SCCP shall immediately notify CMIC and PSE or successor entities through email, telephone, fax or other means it may deem appropriate to provide them an opportunity to state their position on the matter. 12.7.2 Once SCCP confirms that the condition on the Security shall be imposed or removed, SCCP shall notify the Participants via a Memo for Participants of the date when the condition shall take effect and any particulars relevant to such action. 12.8 Reportorial Requirements 12.8.1 SCCP shall require the Participant to submit on an annual basis the Depository Participant Information Form on the 15th business day of January. The Participant is responsible for updating SCCP regarding any change in the information contained in the Depository Participant Information Form. 12.8.2 The Participant shall be required to submit the following to SCCP on a monthly basis, every 5th business day of the following month: (a) A certification that all applicable taxes have been paid and the corresponding tax clearances have been obtained; (b) In case of transfer of Securities under Rule 1.7.3, a certification that there has been no change in beneficial ownership; and (c) Such other reports as SCCP may require from time to time. 12.8.3 Failure to submit the reportorial requirements on the deadline set by SCCP shall subject the Participant to the appropriate penalty. 12.9 Insurance 12.9.1 The Depository shall maintain an insurance policy in such amounts and for such coverage as may be reasonably determined by the SCCP Board of Directors. The Participants shall be notified of any material reduction in the amount or coverage of the insurance. 12.9.2 Losses covered by the insurance policy shall be paid out at the discretion of the SCCP Board. 12.10 Force Majeure SCCP shall execute the Business Continuity and Disaster Recovery Plan as applicable. <http://www.pse.com.ph/stockMarket/circulars.html?method=downloadCirculars&ajax=true&ids=[%22CN_2012-0055%22]> last visited on January 24, 2013. n Note from the Publisher: Copied verbatim from the official document.