In the Matter of Application of Securities Clearing Corporation of the Philippines as a Securities Depository

February 19, 2013 SEC-MRD * ORDER NO. 003-13 IN THE MATTER OF APPLICATION OF SECURITIES CLEARING CORPORATION OF THE PHILIPPINES AS A SECURITIES DEPOSITORY ORDER During the Commission meeting on 4 February 2013, the Commission issued SEC Resolution Number 62 series of 2013 resolving to GRANT a provisional license to Securities Clearing Corporation of the Philippines (SCCP) to operate as a Securities Depository subject to the following conditions: EaIDAT a) There shall be a transition period of six (6) months which shall include two (2) months of training and information campaign and four (4) months pilot testing. Relative thereto, SCCP shall submit a comprehensive pilot test plan for review by the Commission. b) SCCP shall immediately initiate and complete the incorporation of SCCP Nominee Corporation. c) SCCP shall inform the Commission of its plan to formally start operation at least fifteen (15) days before operation. d) The operation of SCCP Depository shall be subject to review after twelve (12) months including the 6 months transition period. e) SCCP shall fill up vacancies in its manpower requirements for depository operation within forty five (45) days from date of approval. f) SCCP shall immediately submit to the Commission four (4) copies of the approved version of the amended rules and operating procedures for depository operation including the schedule of fees , bearing the initials of two SCCP Depository officials on each page of said rules and procedures. The copies bearing the initials of SCCP Depository and the Director, Market Regulation Department, SEC, shall be the official copies thereof. g) Subsequent changes in fees or any additional fees shall be subject to approval by the Commission. h) PSE shall be directed and required to earmark additional investment in SCCP to support the operation of the depository function in the first three (3) years of operation, the amount of which shall be submitted and justified by the applicant to the Commission not later than February 28, 2013. The said "earmarking" shall be properly disclosed in PSE's interim financial statement as of first quarter of 2013. i) SCCP shall submit not later than February 28, 2013 a justification on the amount of insurance policy (which shall answer for losses that the company would incur relative to its depository function) subject to approval by the Commission. j) SCCP shall submit within forty five (45) days from date of approval a revised internal control procedure which provides for segregation and/or independence of SCCP's Depository function from its clearing and settlement function (including segregation of operating books and records, among others). The said internal control procedure shall also provide procedures that will ensure that SCCP Depository's participants shall be subject to the disciplinary rules of SCCP Clearinghouse. k) Such other requirements, including the maintenance of unimpaired minimum capitalization, that the Commission may issue from time to time in conformity with internationally accepted standards and best practices and as the Commission may deem consistent with the public and other stakeholders' interest and the protection of investors. cHAaCE l) SCCP Depository shall cease operation, upon order by the Commission, for failure to comply with the above conditions or when its operation is no longer feasible financially and/or legally or when its continuance will not be consistent with the development and growth of the capital market. The SCCP Board of Directors thru a Directors' Certificate shall signify its conformity with the foregoing conditions within fifteen (15) days from receipt hereof. Pursuant to Section 40.8 of the Securities Regulation Code, the powers of the Commission with respect to Self-Regulatory Organizations under Section 40 of the SRC shall also apply to SCCP as registered clearing agency which is also now authorized to operate a securities depository subject to the above conditions. Therefore, as communicated in our letter dated 11 February 2013 informing you of the approval, we hereby reiterate our directive for you to comply with the above conditions within the prescribed deadlines. Initially, SCCP shall submit to the Commission the following on or before 26 February 2013: 1) Director's Certificate signifying conformity with the above conditions; 2) The details of the required training and information campaign; 3) The comprehensive pilot test plan; and 4) Information on the date the applicant intends to start the prescribed transition period. SO ORDERED. EDSA, Mandaluyong City, February 19, 2013. (SGD.) VICENTE GRACIANO P. FELIZMENIO, JR. Director