The Securities and Exchange Commission (SEC) thumbled down the application of Citisec Online Trading Corp. to engage in cross-border trading for local investors.
Previously, SEC gave its conditional approval to Citisec to engage in online trading subject to certain conditions, among them, that it be limited to blue chip stocks listed at the Philippine Stock Exchange. The SEC said Citisec is not allowed to trade on foreign stocks.
Citisec wants to engage in cross border trading for local investors especially after it obtained a broker-dealer license. In a letter to the SEC, it laid out its plans that include: trading issues that are duly-registered and listed in foreign stock markets such as US, Hong Kong, Singapore, Japan and the United Kingdom; it will make use of its propriety and trade-market related web site in the Internet in connecting the local investors with the outside market; in order to facilitate trading in these markets, it will tie up with reputable online brokerage firms operating in the corresponding foreign countries.
SEC Commissioner Danilo Concepcion said however that Citisec's secondary license as a broker-dealer of securities does not allow it to trade securities that have not been registered in the Philippines, particularly Section 4 of the Revised Securities Act.
"This is not legally tenable . . . and while we subscribe to Citisec's desire to let local investors gain from the benefits of cross border trading, the foremost intention of our securities law to protect the investing public simply overrides other considerations," Concepcion said.
Citisec applied last year for a license with the SEC as a non-exchange member broker/dealer in securities.
Incorporated last year, Citisec is engaged primarily in the business of broker/dealer in securities of any kind and of every description including online stockbrokerage services through Internet technology.