The SEC, however, is still hopeful that the appellate court will decide in its favor and acknowledge the corporate watchdog as the agency fit to oversee the commodity futures market.
The commission has already drafted the rules and guidelines that will pave the way for the revival of the commodity futures market. It is now going over pending applications for the establishment of a futures market to determine which have complied with the requirements.
The SEC prefers the Philippine Stock Exchange to operate the new futures exchange since it already has the expertise and financial capability to do so. Other entities, however, are still welcome because they may pose tough competition and challenge the PSE to improve its services and operations.
So far, only Philippine Mercantile Exchange Inc. had met the requirements of the SEC. It is composed of a powerhouse cast of stockbrokers and investment bankers including Victor Limlingan, Eusebio Tanco, Rodolfo Cruz, Paulino Soo, Roberto Panlilio, Don Calderon and Norberto Ong, among others.
Under the new rules and guidelines earlier drafted by the SEC for the operation of the new futures exchange, proponents are required to submit a draft business plan together with an estimated timetable for its proposed activities, the articles of incorporation and by-laws of the proposed futures exchange, a desirable profile of acceptable members, business conduct rules and trading rules.
The entity that will put up the new futures exchange must also have a minimum paid-up capital of P200 million to answer for investors’ claims in case it runs into financial trouble.
The SEC also wants proponents to organize an electronic clearing house which must be able to process trades as well as update positions and cash continuously as transactions take place.
The clearing house must be flexible to support an expanding universe of simple and complex products applicable to the domestic market. It must also be efficient and rapid in new product launches. It must be adaptable to international standards and must provide the link up to other international clearing organizations.
The SEC wants the clearing house to be organized as a separate corporation independent from the management of the futures exchange. The ownership structure must be open to one or several foreign international clearing operations that will assure the success of the domestic futures operations.
The SEC shut down in 1997 the operations of the defunct Manila International Futures Exchange due to widespread anomalies in the futures market. MIFE started operating in 1986 with 18 member-brokers and went down to only six as a result of massive complaints from several investors. – Zinnia dela Peña