Topics:

1. History of Philippine Stock Exchange by By: James Rada, Jr.

2. 25 Basic Terminologies in the Stock Exchange you should know
3. FAQs in the stock market

History of Philippine Stock Exchange

The Philippine Stock Exchange first appeared in 1993, but its history runs much longer. The exchange
was a merger of the Manila Stock Exchange and the Makati Stock Exchange, which created a single
exchange in the Philippines. The merger also served as a symbol to a country that had seen its share of
political divisions that the nation could act in a singular direction.

Manila Stock Exchange

The Manila Stock Exchange was founded Aug. 8, 1927, by five U.S. businessmen. It was in the Insular
Life Building on Plaza Cervantes, Binondo. Founders are W.P.G. Elliot, W. Eric Little, Gordon W.
Mackay, John J. Russell and Frank W. Wakefield said that they wanted a stock exchange that would
serve the public, practice ethical standards and uphold good business practices. They also claimed
that trading in stocks would stimulate the Philippine's economy. The Manila Stock Exchange moved to
Pasig in 1992.

Makati Stock Exchange

The younger Makati Stock Exchange was founded May 27, 1963. It, too, had five founding members:
Miguel Campos, Bernard Gaberman, Aristeo Lat, Eduardo Ortigas and Hermenegildo B. Reyes. Because
the Philippines already had an operating stock exchange, there was opposition to a second one. The
exchange, which was in the Insular Life Building in Makati, did not begin operating until Nov. 16, 1965.
In 1971, it moved to its own building on Ayala Avenue in Makati.

Competition
Though the Philippines had two stock exchanges, they both traded the same stocks. They were
duplicating efforts, but they had different policies, different members and different stock prices. It soon
became evident that the country needed only a single stock exchange.

Unification
Philippine President Fidel Ramos led the effort to unite the two exchanges as one. The Philippine Stock
Exchange was founded July 14, 1992, and by Dec. 23, both the Makati and the Manila exchanges agreed
to become part of it.

Philippine Stock Exchange

The first board of governors for the Philippine Stock Exchange was elected March 20, 1993. They were
the president of the exchange and 14 member brokers. Eduardo de los Angelos was the first president of
the Philippine Stock Exchange and Eduardo C. Lim was the first chairman of the board.
Just short of a year later, the Securities and Exchange Commission granted the stock exchange its license
to operate as a securities exchange. The licenses for the Manila and Makati exchanges were canceled at
the same time. The Philippine Stock Exchange is at the Philippine Stock Exchange Centre, Ortigas
Centre, Pasig City and at the PSE Plaza, Ayala Avenue, Makati City.
The Philippine Stock Exchange has made improvements in its goal to become a premiere exchange. It
became a member of the Association of National Numbering Agencies in 1995. In 1998, the Securities
and Exchange Commission made the Philippine Stock Exchange a self-regulatory organization, which
allows it to create its own rules and impose penalties on members.
 Position Name

Chairman and Independent Director Jose T. Pardo

Director Ramon S. Monzon

Emmanuel O.
Director
Bautista

Director Anabelle L. Chua

Director Francis Chua

Director Eddie T. Gobing

Director Amor C. Iliscupidez

Director Edgardo G. Lacson

Director Eusebio H. Tanco

Director Wilson L. Sy

Director Alejandro T. Yu

Ma. Vivian
Director
Yuchengco

Francisco T. Duque
Director
III

Independent Director Dakila B. Fonacier

Independent Director Vicente L. Panlilio

Management Officers

Position Name

President and Chief Executive Officer Ramon S. Monzon

Senior VP and Chief Operating Officer Roel A. Refran

VP and Head - Governance, Risk and J. Argel G.

Compliance Astudillo

VP and Head - Market Operations

Rachelle C. Blanch
Division

AVP and Head - Internal Audit Group Jinky A. Alora

AVP and Head - Technology Division Philip A. Driz

AVP & Head-Corporate Planning &

John Benette B.
Investor Relations Division & OIC,
Mamañgun
Capital Markets Devt Division

AVP and Head - Issuer Regulation Marsha Angelyn M.

Division Resurreccion

Mary Catherine
AVP and Head - Human Resources and
Lydet Soliman-
Administration Division
Radaza

Veronica Vicedo-
AVP, General Counsel
Del Rosario
 Position Name

Treasurer Omelita J. Tiangco

Aissa V.
Corporate Secretary
Encarnacion

Top 30 companies from the Philippines’ PSEi

Common Sectors: Property, financials, services, (equity)holding firms, mining and oil, industrial (ex.
Electricity), etc

25 Terminologies in the PSE you should know:

1. Averaging Down: This is when an investor buys more of a stock as the price goes down. This
makes it so your average purchase price decreases.
2. Bear Market: This is trading talk for the stock market being in a down trend, or a period of
falling stock prices. This is the opposite of a bull market.
3. Beta: A measurement of the relationship between the price of a stock and the movement of the
whole market. If stock XYZ has a beta of 1.5, that means that for every 1 point move in the
market, stock XYZ moves 1.5 points and vice versa.
4. Blue Chip Stocks: These are the large, industry leading companies. They offer a stable record of
significant dividend payments and have a reputation of sound fiscal management. The expression
is thought to have been derived from blue gambling chips, which is the highest denomination of
chips used in casinos.
5. Bull Market: This is when the stock market as a whole is in a prolonged period of increasing
stock prices. Opposite of a bear market.
6. Broker: A person who buys or sells an investment for you in exchange for a fee (a commission).
7. Day Trading: The practice of buying and selling within the same trading day, before the close of
the markets on that day. Traders that participate in day trading are often called “active traders” or
“day traders.”
8. Dividend: this is a portion of a company’s earnings that is paid to shareholders, or people that
own that company’s stock, on a quarterly or annual basis. Not all company’s do this.
9. Exchange: An exchange is a place in which different investments are traded. The most well-
known in the Philippines is the Philippine Stock exchange.
10. Execution: When an order to buy or sell has been completed. If you put in an order to sell 100
shares, this means that all 100 shares have been sold.
 11. Hedge: This is used to limit your losses. You can do this by taking an offsetting position. For
example, if you hold 100 shares of XYZ, you could short the stock or futures positions on the
stock.
12. Index: An index is a benchmark which is used as a reference marker for traders and portfolio
managers. A 10% may sound good, but if the market index returned 12%, then you didn’t do very
well since you could have just invested in an index fund and saved time by not trading frequently.
13. Initial Public Offering (IPO): The first sale or offering of a stock by a company to the public,
rather than just being owned by private or inside investors.
14. Margin: A margin account lets a person borrow money (take out a loan essentially) from a broker
to purchase an investment. The difference between the amount of the loan, and the price of the
securities, is called the margin.
15. Moving Average: A stock’s average price-per-share during a specific period of time. Some time
frames are 50 and 200 day moving averages.
16. Order: An investor’s bid to buy or sell a certain amount of stock or option contracts. You have to
put an order in to buy or sell 100 shares of stock.
17. Portfolio: A collection of investments owned by an investor. You can have as little as one stock
in a portfolio to an infinite amount of stocks.
18. Quote: Information on a stock’s latest trading price. This is sometimes delayed by 20 minutes
unless you are using an actual broker trading platform.
19. Rally: A rapid increase in the general price level of the market or of the price of a stock.
20. Sector: A group of stocks that are in the same business. An example would be the “Technology”
sector including companies like Apple and Microsoft.
21. Spread: This is the difference between the bid and the ask prices of a stock, or the amount
someone is willing to buy it and someone is willing to sell it.
22. Stock Symbol: A one-character to three-character, alphabetic root symbol, which represents a
publically traded company on a stock exchange. Apple’s stock symbol is AAPL.
23. Volatility: This refers to the price movements of a stock or the stock market as a whole. Highly
volatile stocks are ones with extreme daily up and down movements and wide intraday trading
ranges. This is often common with stocks that are thinly traded, or have low trading volumes.
24. Volume: The number of shares of stock traded during a particular time period, normally
measured in average daily trading volume.
25. Yield: This usually refers to the measure of the return on an investment that is received from the
payment of a dividend. This is determined by dividing the annual dividend amount by the price
paid for the stock. If you bought stock XYZ for P40-a-share and it pays a P1.00-per-year
dividend, you have a “yield” of 2.5%

Frequently Asked Questions in the Stock Market:

1. What are stocks? Stocks are shares of ownership in a company. When you buy stocks of a
publicly listed company, you become part owner of that company. As a part owner, you
participate in the company’s growth and future profits. Conversely, you may also lose if the
company suffers a loss or performs below market expectations.

2. What is a stock market? The stock market is a place where stocks are bought and sold or a place
where people can invest in publicly listed companies through the Philippine Stock Exchange, Inc.
(PSE).

3. Why invest in stocks? How do I make my money grow in the stock market? Historical data
has shown that investing in stocks over the long-term provides superior returns. Stocks offer
potentially higher yields compared with fixed income instruments such as time deposits,
government securities and bonds. There are three (3) rationales for stock investing:

a. Ownership in a company
When an individual invests in the stock market, he automatically becomes a stockholder of a particular
listed company. As a stockholder, he is entitled to the following benefits: a.1) voting rights; a.2)
dividends to be declared by the corporation; and a.3) share of the remaining assets of the company if it is
to be liquidated.

b. Liquidity of funds
A stock market investor has easier access to funds. Compared with banks which require high minimum
conditions for deposits and credit, an individual can start an investment for as low as Php 5,000.00. He
can cash in or out his funds during trading hours, through his broker.

c. Make money
Investors in the stock market make money through dividends and capital appreciation. When a listed
company declares dividends, its shareholders increase their investing power. An investor who buys into
the company at a low market price and sells it at a higher price will gain capital appreciation.

4. What are the different dividends given by publicly listed companies? There are two types of
dividends that can be given by companies:
a. Cash dividends - these are earnings for every share of stock declared by the company.
b. Stock dividends - these are additional shares given to shareholders at no cost which can be sold
anytime.

5. Is there any risk involved in investing? While it is true that a stock investment is the most volatile
of all securities, investors might well remember that uncertainty is a permanent feature of the investing
perspective. This means that risk is always a part of any investment. A better attitude would be to limit
and manage your risk. A maximum level of gain or loss should be set, and calculated decisions should be
made when this level is reached.

6. How do I start investing in stocks? How much of my savings can be invested in stocks? Just like
an ordinary savings account, an investor has to open an account and present valid identification with a
broker before he can actively trade stocks on the Exchange. An investor would need at least the minimum
amount of investment to open a trading account which is Php5,000.00.

Getting started in the stock market is a simple process.

1. Choose your stockbroker or trading participant.
2. Open a trading account with your stockbroker of choice.
3. Place your buy or sell order either online or through a phone call to your stockbroker.
4. Monitor and keep track of your investments.

7. What is the minimum amount of initial investment? The minimum amount of money needed to
invest in the stock market depends on the minimum number of shares to be traded for the stock and the
minimum amount required to open a trading account. The minimum number of shares that can be traded
will be determined by the prevailing market price of a particular stock. The PSE has a Board Lot table
which shows the minimum number of shares that can be bought or sold given a certain price range.

8. How do I choose a stockbroker? There are over 100 licensed stockbrokers accredited by the PSE.
Your choice of stockbroker should depend on the type of service you will require and who will best suit
your needs.

The types of stockbrokers can be classified into:

a. Traditional – those who assign a licensed salesman that take orders through written instructions or
phone calls
b. Online – those whose main interface with the customer is via the Internet

You can get a complete list of accredited stockbrokers by visiting the PSE website, www.pse.com.ph, or
contacting the PSE at (632) 819-4100.

9. How do I open an account? Similar to the process in opening a bank account, you will be required to
fill out a form called Customer Account Information Form (CAIF), and submit the following documents,
namely:
a. Two (2) valid IDs;
b. Specimen signature cards; and
c. Proof of billing (although some brokers do not require this).

Depending on your stockbroker, you may be also asked to provide additional pertinent documents and an
initial cash deposit in order to begin investing in stocks.

10. How can an overseas Filipino open a trading account? For overseas Filipinos, the simplest and
more convenient way of investing directly in the local equities is to open a trading account with an online
stockbroker or apply directly with any overseas branch of Philippine banks that are affiliated with any of
the active stockbrokerage houses in the PSE. Through the internet, overseas investors will be able to
access the Philippine stock market and trade stocks real-time.

Overseas investors can also participate in the Philippine stock market through mutual funds, and index
and variable-linked funds offered by various financial institutions such as banks, mutual fund
management companies and insurance firms in the Philippines.

11. How do I place an order? The conventional way of placing an order to buy or sell is through a phone
call to your stockbroker. However, online trading is now being practiced so investors can place orders
directly via the Internet.

12. How are settlement and clearing done? How long is the settlement period? Settlements of
accounts are done through the clearing house of the Exchange, the Securities Clearing Corporation of the
Philippines (SCCP). Stock market transactions are settled on the third day after the trade (T+3). Transfers
are based on trades done at PSE. Shares are transferred on settlement date to the buyer, and the buyer
pays the seller through the clearing banks within the same settlement period. This means that transactions
done on Monday must be settled by Thursday.

13. Do I need to have physical evidence of my stock ownership? The PSE through its central
depository, the Philippine Depository Trust Corp. (PDTC) uses the computerized book-entry system
(BES) to transfer ownership of securities from one account to another, thus eliminating the need for
physical exchange of scrip between buyer and seller. This system is called scripless trading. However,
you may still request for an upliftment of your shareholdings to get a physical certificate.

14. What are my obligations to my broker?

1. Always update personal information provided to your broker, particularly:

a. client’s residence or business address
b. Contact numbers
c. E-mail address
2. Always settle your buying transactions on T+3 (settlement date).

15. What are the broker’s obligations to its clients?

1. Your agent must confirm your securities transaction after trading hours.
2. Buying/selling invoices must be delivered to the client on T+1 (transaction day plus one day).
3. Stockbrokers must send the client’s statement of account on a monthly basis.
4. Your stockbroker must send you information and correspondences relevant to your investment.