SEC launches surveillance system to detect stock fraud

As part of its efforts to rid the capital market of unscrupulous elements, the Securities and Exchange Commission launched yesterday its surveillance system aimed at easily detecting fraud, manipulation and other illegal practices in the exchange.

SEC Chairman Lilia B. Bautista said the system is expected to prevent the repeat of the BW Resources stock market scandal, which nearly caused the collapse of the market in 1999.

"Hopefully, there will be no more BW. With the system in place, one could easily see detect any irregularity in the trading pattern," Bautista said.

The acquisition of the software, dubbed as the Advanced Warning and Control System, is funded by the Asian Development Bank as part of the multilateral agency’s technical assistance program to strengthen the SEC’s capability for market regulation and governance.

The system is necessary for the SEC to effectively perform its oversight functions on the Philippine Stock Exchange. It allows the SEC to have quick access to historical information and reports, and will warn for unusual market activities.

It will scrutinize orders from the time they are placed until they are traded or cancelled. It enables storage of information in the folders for cases worthy of further investigation.

SDG Software Technologies of India, which designed the system, has made the software suitable for multiple market segments and across stock markets.

The company has provided similar services to a number of European countries. It was selected as a result of an extensive evaluation of available surveillance systems in regional and world markets conducted by the ADB consultants in coordination with the SEC and participants.

The license grants the SEC the right to use for a period of 24 months the software and the servers that will be connected to two client-terminals, which will be located at the Market Regulation Department of the SEC.