SEC Phase 2-7B Equities Securities Salesman (ESS) Exam - Philippines key terms

The Philippine law governing the offer, sale, and trading of securities, creating the SEC's powers over registration, licensing, disclosure, and prohibited market conduct such as fraud and manipulation.

A disclosure document filed with and cleared by the SEC that describes an issuer, its business, financials, and the securities offered, forming the basis for investors' informed purchase decision.

The filing an issuer submits to the SEC to register securities for public offering, containing the prospectus plus supplementary information subject to SEC review and approval.

A securities sale that may proceed without full SEC registration, such as certain private placements or limited offers, provided the specific conditions and filing notices in the rules are met.

Any fact a reasonable investor would likely consider important in deciding to buy, hold, or sell a security, including undisclosed earnings changes, major contracts, or litigation outcomes.

Buying or selling securities while in possession of material non-public information obtained through a relationship of trust, or communicating such information to others who trade on it.

Trading ahead of a client's known pending order to profit from the expected price impact, a breach of duty owed to the client and a form of market abuse.

Conduct intended to distort a security's price or trading volume, such as wash sales, matched orders, or spreading false rumors, thereby misleading other market participants.

A transaction where the same beneficial owner buys and sells the same security without a genuine change in ownership, creating misleading volume or price activity.

A scheme that inflates a stock's price through false or exaggerated promotion, then sells the promoter's holdings at the artificially high level, leaving other investors with losses.

An internal information barrier separating departments such as investment banking from sales and trading, preventing confidential deal information from reaching staff who could misuse it.

A compliance-maintained list of securities in which firm personnel may not trade or recommend because the firm holds material non-public information about the issuer.

The process of identifying a client, verifying identity and beneficial ownership, and understanding their financial situation and objectives before opening an account or recommending products.

Ongoing risk-based checks on clients covering identity, source of funds, business profile, and transaction patterns, used to detect and report suspicious activity under anti-money laundering rules.

A confidential filing made to the Anti-Money Laundering Council when a transaction appears unusual or inconsistent with a client's profile, regardless of the amount involved.

The requirement that a recommendation match a client's investment objectives, risk tolerance, financial capacity, and experience, documented through a client account information form.

The onboarding record capturing a client's identity, employment, income, net worth, investment experience, and objectives, which supports suitability judgments and periodic updating.

The rule that a client's order must be executed before the salesperson's own or the firm's proprietary order in the same security at the same price, protecting clients from being disadvantaged.

Trading by firm personnel in their own accounts, typically permitted only with pre-clearance and subject to holding periods and blackout restrictions set by compliance.

The duty to seek the most favorable terms reasonably available for a client order, considering price, speed, likelihood of execution, and order size under prevailing market conditions.

The written or electronic record of an order capturing client identity, account number, security, side, quantity, price terms, time received, and execution details, retained for audit.

Recording the exact time an order is received and executed, establishing an audit trail and enabling regulators to test compliance with priority and execution rules.

An instruction to buy or sell a security only at a specified price or better, giving price certainty but no guarantee of execution if the market does not reach that level.

An instruction to execute immediately at the best available prevailing price, prioritizing speed of execution over control of the exact price received.

The sole organized stock market in the Philippines, operating trading platforms and listing rules under SEC oversight, where equity securities are bought and sold.

The clearing and settlement entity for PSE trades, acting as central counterparty that novates transactions and manages settlement risk among trading participants.

The central securities depository that holds securities in book-entry form and processes transfers between participants' accounts, supporting delivery-versus-payment settlement.

The standard period between trade execution and final exchange of cash and securities, currently T+2 for PSE equities, during which counterparties must settle their obligations.

The prescribed minimum trading quantity for a security, set by price level, ensuring orderly trading and standard order sizes on the exchange.

The minimum price increment at which a security may be quoted and traded, varying by price range to balance market liquidity and price precision.

A PSE member firm authorized to trade on the exchange on behalf of clients or itself, subject to SEC licensing, capital, and conduct requirements.

The SEC-issued credential required for individuals who solicit securities business or advise clients on securities, obtained by passing the qualifying examination and meeting fitness standards.

An individual employed by or affiliated with a broker-dealer who performs sales, advisory, or supervisory functions in securities, and whose conduct binds the firm.

A firm's obligation to oversee the activities of its registered personnel through procedures, review of correspondence and trades, and prompt handling of client complaints.

The requirement to maintain accurate, retrievable books and records of accounts, orders, communications, and complaints for the period prescribed by the SEC, available for inspection.

The timely public release of material corporate information, such as earnings, dividends, or ownership changes, so all investors trade on an equal information footing.

A shareholder's entitlement to subscribe to new shares in proportion to existing holdings before they are offered to outsiders, protecting against dilution of ownership.

An issuance granting existing shareholders the option to buy additional shares, usually at a discount, within a set period, often supported by tradable rights.

A distribution of additional shares to existing holders in lieu of cash, increasing share count while reducing earnings per share proportionally without changing total equity.

A division of existing shares into a larger number, lowering the price per share while leaving total market value and shareholders' proportionate ownership unchanged.

The cutoff date on which a buyer no longer acquires the right to a declared dividend or entitlement, because settlement timing means the seller retains the benefit.

The reduction in existing shareholders' percentage ownership or earnings per share caused by issuing new shares, exercising options, or converting convertible securities.

Net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding, a core measure used in valuation multiples such as price-to-earnings.

A share's market price divided by its earnings per share, indicating how much investors pay for each peso of earnings and reflecting growth expectations and risk.

Total shareholders' equity divided by shares outstanding, representing the accounting net worth per share used in price-to-book comparisons across companies.

Evaluating a security by examining the issuer's financial statements, industry position, management quality, and macroeconomic factors to estimate intrinsic value.

Forecasting price direction by studying historical price charts, volume, and indicators such as moving averages, on the premise that market patterns tend to repeat.

Market-wide risk affecting all securities, such as interest rate shifts or economic downturns, which cannot be eliminated through portfolio diversification.

Spreading investments across assets, sectors, and issuers to reduce the impact of any single holding's poor performance on the overall portfolio.

The possibility that a security cannot be sold quickly at a fair price because trading volume is thin or buyers are absent, forcing a discount.

Trading and settlement conducted through electronic book-entry records rather than physical certificates, reducing handling costs and transfer delays in the Philippine market.