SEC to allow use of Internet for stocks trading

The Securities and Exchange Commission will allow investment houses and other capital market players to use the Internet for selling stocks and other forms of securities, provided the full disclosure rules and the guidelines in the E-Commerce Law are complied with.

SEC officer-in-charge for the Market Regulation Department Jose P. Aquino said this was the agency’s position in reply to a query by investment firm, Amalgamated Investment Bancorporation, on regulations and policies governing Internet-based transactions.

AIB assistant vice president Stanley Saguinsin had earlier asked the SEC if it would allow an investment house to use its website to distribute application forms and other selling materials of an initial public offering (IPO).

He said tech stock DFNN.com had done this in its IPO last October. "As an investment house, AIB intends to make available the IPO selling materials using its website for easier access of potential investors," Saguinsin said.

AIB was the issue manager and lead underwriter of the Pancake House Inc. IPO, which was listed at the PSE last Dec. 15.

Saguinsin said the coverage would include book building, subscription forms, signature cards, prospectus and other selling materials like research reports and PowerPoint presentations.

"We believe that by doing this, we would not only contribute to the broadening of the investor base but also increase the accessibility of information to potential investors with regards to a proposed IPO, he added.

Under the SEC’s guidelines for electronic delivery, the subscription agreement to purchase the securities should contain a signed declaration by investors that they have received the most current version of the electronic prospectus or a print out of it.

It also states that no later than five days prior to use, the issuer or any person acting in behalf in the public distribution of securities should provide the SEC with a print out of the electronic prospectus and any disk or CD-ROM that will be issued and the address of any Internet, site on which it will be made available.

The issuer should also take reasonable steps to ensure that investors receive the most current version of the electronic prospectus or print out of it through electronic mail return receipt of confirmation of accessing, downloading or printing.