SEC sees alternative trading system in place next year

The Securities and Exchange Commission (SEC) expects the establishment of an alternative trading system (ATS) facility to take place early next year.

Emil P. Aquino, head of the SEC’s Non-Traditional Securities Department, said the commission is now looking at the US and United Kingdom models to determine which would be suitable for application in the Philippine capital market.

"We’re trying to look for a suitable model. We hope to see it operate by January 2004," Aquino said.

Aquino said he is reviewing the operations of the New York Private Placement Exchange and another exchange based in Europe to determine which could serve as the policy framework that will allow the trading of innovative securities in the Philippines.

An ATS refers to any organization, association, person or group of persons or system that maintains or provides an electronic market place or facilities for bringing together purchasers and sellers of securities.

Aquino said the SEC has yet to finalize the rules governing the operation of an ATS as other government agencies have yet to comment on the draft rules.

The proposed rules are based and premised on international best practices gathered as part of the research effort and behind their development, the SEC said.

SEC said investors may look into these alternative markets for other investment products which are not currently offered by traditional investment outlets.

The SEC noted that ATS has become integral to the modern securities markets, providing investors with enhanced flexibility and reduced trading costs as well as competition to the established securities exchanges.

Examples of ATS include proprietary trading systems, broker-dealer trading systems or electronic communications networks that are order-matching systems.

The SEC has already received requests from companies willing to offer innovative financial products. Those considered for coverage under the proposed rules are online trading services that may be offered to the public.

The SEC is also looking into the possibility of allowing online matching for companies looking for private equity financing from institutional investors.