SEC-MSRD Opinion

March 27, 2015 SEC-MSRD * OPINION Tradition Financial Services Philippines, Inc. 24/F Tower 1, The Enterprise Center 6766, Ayala Avenue Corner Paseo de Roxas, Makati City 1226 Fax: 02-889-8209 Attention: Board of Directors Gentlemen : This refers to the letter of Tradition Financial Services Philippines, Inc. ("Tradition" or the "company") dated 26 March 2015, signed by its Director-Corporate Secretary Lorna Patajo-Kapunan and Director Irene Joy Besido-Garcia, praying that the suspension of license of Tradition be lifted. Pursuant to the suspension order dated 18 March 2015 issued by the Department, the Certificate of Registration as Voice Broker in Government Securities and Permit to Operate as Voice Broker in Government Securities of Tradition was suspended for at least five (5) days beginning 19 March 2015 and until such time that the company is able to comply with the requirements of SEC Memorandum Circular No. 16, Series of 2004, otherwise known as the Risk Based Capital Adequacy (RBCA) Rules or "RBCA Rules". Background and Discussions In support of its request for the lifting of suspension order, the company submitted the following documents: 1. Subordinated Loan Agreement between Tradition and Tradition Asia Pacific Pte. Ltd. ("Tradition Asia") for the total amount of Php200,000,000.00 , the breakdown of which is as follows: 1.1. Intercompany payables to Tradition Asia Pacific Pte. Ltd. Php186,427,081.00 1.2. Cash infusion from Tradition Asia Pacific Pte. Ltd. Php13,572,919.00 2. Proof of telegrapic transfer of the amount of Php13,572,919.00 from Tradition Asia Pacific Pte. Ltd. 3. Undertaking dated 26 March 2015 executed by Mr. Jaime F. Villalon and Carlito De Castro, President and Associated Person (AP) of the company, respectively, to the effect that they shall ensure that the company will cease operations motu proprio in the event of violation of the RBCA Rules, particularly with respect to the minimum RBCA Ratio requirement; and 4. Capital build-up plan and computation of its compliance with the RBCA requirements. TESICD Likewise, the company paid the penalty of Php1,000,000.00 on March 25, 2015 as per Official Receipt Number 1253812. A review of the SLA submitted by the company show that the same is compliant with the requirement of the RBCA Rules. Order/Resolution In view of the foregoing, the company's Subordinated Loan Agreement dated 24 March 2015 in the amount of Php200,000,000.00 is hereby APPROVED. Further, the suspension of the company's "Certificate of Registration as Voice Broker in Government Securities" and "Permit to Operate as Voice Broker in Government Securities" is hereby LIFTED. Tradition is reminded to ensure strict and continuing compliance with the requirements of RBCA Rules, otherwise, the Commission shall be constrained to impose upon the company heavier penalty, including possible revocation of license. Let a copy of this Order be served upon the company, its Board of Directors, and copy furnished the Bangko Sentral ng Pilipinas, Bureau of the Treasury, the Bankers Association of the Philippines, Money Market Association of the Philippines, and the Philippine Dealing and Exchange Corp. (SGD.) VICENTE GRACIANO P. FELIZMENIO, JR. Director