SEC on watch vs insider trading

MANILA, Philippines — The Securities and Exchange Commission is working on various initiatives to strengthen the capital market, including looking into reports of insider trading at the stock exchange, SEC officials said in a recent press conference.

SEC commissioner Kelvin Lee said the Enforcement and Investor Protection Department (EIPD) has been closely monitoring the local market for any insider trading activities.

“The EIPD has been monitoring the market. We would welcome it if the public has any reports also. We have people monitoring. It hasn’t been mentioned that (there are findings). What has been mentioned is that there is monitoring,” Lee said.

He said the main goal is to protect investors, but at the same time keep the capital market vibrant.

The SEC is also in the process of issuing a framework for the issuance of digital assets in the Philippines. Lee said the intention is for the SEC en banc to get it out in the fourth quarter of this year.

“The actual implementation will likely be next year,” Lee said.

SEC chairperson Emilio Aquino said regulators were planning to release this earlier, but it had to be extra careful following the collapse of Bahamas-based cryptocurrency exchange FTX in late 2022.

He said while the SEC was ready to issue the guidelines late last year, it decided to study first the reasons behind the collapse of FTX to add more safeguards to what would be a local framework for digital assets in the country.

FTX was the third-largest cryptocurrency exchange by volume and had over one million users. It collapsed because of a liquidity crisis of the company’s token, FTT, which served as the impetus for its bankruptcy.

The SEC framework will cover rules suited for cryptocurrencies and blockchain technology. The rules will also govern the issuance and regulation of digital asset exchanges. It would also ensure that such assets meet global standards on investor protection, market integrity and transparency.

At present, the SEC has been making use of laws and regulations tailored for traditional securities.

Aquino assured the public that the SEC believes in technology and what it can offer. He said regulators are simply making sure that investors have safe investment options so they do not fall victim to scams.

Toward this end, the SEC has likewise inked a memorandum of agreement with the Department of Migrant Workers (DMW) to promote financial literacy among overseas Filipino workers (OFWs) and help them identify potential investment scams.

Under the MOA, the SEC can tap DMW’s existing OFW registry and through it, can better alert OFWs on entities that are illegally soliciting investments from the public.

Aquino said the SEC has been more vigilant as investment scammers have become more creative and aggressive in wooing the public.

In 2018, the SEC issued an average of 25 advisories against investment scams.

From 2020 to 2021, the number has gone up to 150 advisories.