Market Surveillance System

July 14, 1994 SEC-BED * MEMORANDUM CIRCULAR NO. 03-94 TO : The Philippine Stock Exchange SUBJECT : Market Surveillance System In order to ensure fair, orderly and efficient trading of securities, conducted in accordance with the highest ethical standards being observed in developed markets, the Securities and Exchange Commission, pursuant to the provisions of the Revised Securities Act and Presidential Decree No. 902-A, hereby mandates the following: 1. The Philippine Stock Exchange (PSE) will establish, develop and maintain a market surveillance system as envisioned in its by-laws. Within six (6) months from the date hereof, the PSE will develop and have the first phase of its systems development plan operational. 2. The PSE will be responsible for the market surveillance system and the SEC shall exercise an active oversight role. In discharging its oversight functions, the SEC will maintain regular dialogue with PSE and will conduct periodic audits on the operation of the Exchange and its market surveillance system. This shall not, however, prevent the SEC from conducting further audits on any member of the Exchange, its Clearing House and other persons or entities performing related activities. 3. The market surveillance system will established by PSE separate from the two trading systems and the surveillance function will be conducted at a site removed from the trading floors. 4. The market surveillance system will be designed primarily to detect, among others, insider trading, market manipulation, frontrunning and marking the close and other fraudulent transactions, manipulative devices, and other improper activities. 5. The market surveillance system will monitor both the individuals as well as the joint trading activities of the trading floors. 6. The PSE will employ and cause the training of qualifies analysts, investigative and enforcement personnel to properly carry out its surveillance and disciplinary functions. 7. The PSE rules will authorize its investigative personnel to pursue indications of violations of pertinent rules flagged by the market surveillance system by inspecting members' offices and investigating their activities. Said PSE rules will include the requirements and procedures to be observed in cases of such violations. 8. The PSE rules will require the members and entities performing related activities as well as listed companies shall extend full cooperation and make available upon request of the Exchange books, records and other documents deemed necessary in any investigation. 9. In the discharge of these functions, the PSE will have the full support and cooperation of the SEC. For your strict compliance. For the Commission: (SGD.) ROSARIO N. LOPEZ Chairman MEMORANDUM CIRCULAR TO : ALL CONCERNED SUBJECT : ADMINISTRATIVE GUIDELINES ON THE FUNCTIONAL OPERATION OF THE DEPARTMENTS OF THE COMMISSION Pursuant to Section 2 of Presidential Decree No. 902-A vesting in me the power of " general executive control, direction and supervision of the work and operation of its members, bodies, personnel and all of its administrative business " I hereby order that: " The staffing pattern, jurisdiction and functional operation of all departments of the Commission shall be maintained in its status quo as explicitly delineated in PD 902-A, as amended, unless the existing laws their implementing rules and regulations are amended/revised in accordance with law ." Emphasis is laid to the fact that under MC No. 3 s. of 1988 on Filling up of Positions in the Approved Staffing Pattern of Reorganized Agencies it is so provided that " To guarantee organizational stability and promote employee morale that will ensure a more effective and responsive public service, appointing authorities are reminded to fill up items in their approved staffing pattern pursuant to the reorganization of their respective departments or agencies by regular and not casual for contractual appointments or through details, designations or assignments. Civil Service employees shall perform duties and responsibilities of the positions to which they are appointed ." This Order shall remain in full force and effect until further notice. For strict compliance. (SGD.) ROSARIO N. LOPEZ Chairman