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

During the pre-open phase of the Philippine Stock Exchange (PSE) trading day, what is the rule regarding order cancellation and modification between 09:15 AM and 09:30 AM?

• AOrders can be cancelled or modified freely without any restrictions.
• BOrder cancellation and modification are strictly prohibited during this time.
• COnly order modification is allowed, but cancellations are prohibited.
• DOnly cancellations are allowed, but modifications are prohibited.

At what time does the regular trading session of the Philippine Stock Exchange (PSE) resume after the daily market recess?

• A12:30 PM PST
• B01:00 PM PST
• C01:30 PM PST
• D02:00 PM PST

What is the standard settlement cycle (T+X) for equity transactions executed on the Philippine Stock Exchange (PSE)?

• AT+1 (Transaction date plus one business day)
• BT+3 (Transaction date plus three business days)
• CT+5 (Transaction date plus five business days)
• DT+2 (Transaction date plus two business days)

Which entity acts as the central securities depository for equities traded on the Philippine Stock Exchange (PSE), providing book-entry settlement?

• APhilippine Depository and Trust Corporation (PDTC)
• BSecurities Clearing Corporation of the Philippines (SCCP)
• CCapital Markets Integrity Corporation (CMIC)
• DSecurities and Exchange Commission (SEC)

During which daily trading phase on the Philippine Stock Exchange (PSE) are matched orders executed specifically at the final closing price?

• APre-close phase (02:45 PM – 02:48 PM)
• BContinuous trading session (01:00 PM – 02:45 PM)
• CRun-off / Trading-at-last phase (02:50 PM – 03:00 PM)
• DPre-open phase (09:00 AM – 09:15 AM)

Which of the following describes the daily schedule of the market recess at the Philippine Stock Exchange (PSE)?

• A12:00 PM to 01:30 PM PST
• B11:30 AM to 01:00 PM PST
• C12:00 PM to 01:00 PM PST
• D12:30 PM to 01:30 PM PST

What is the rule regarding order cancellation and modification on the Philippine Stock Exchange (PSE) during the pre-close phase between 02:48 PM and 02:50 PM?

• AOrder cancellations and modifications are strictly prohibited during these two minutes.
• BOrders can be cancelled or modified freely.
• COnly cancellations are permitted, but modifications are blocked.
• DOnly modifications are permitted, but cancellations are blocked.

Which entity is responsible for clearing and coordinating the settlement of transactions executed on the Philippine Stock Exchange (PSE)?

• APhilippine Depository and Trust Corporation (PDTC)
• BCapital Markets Integrity Corporation (CMIC)
• CSecurities Clearing Corporation of the Philippines (SCCP)
• DSecurities Investors Protection Fund (SIPF)

To engage in short selling on the Philippine Stock Exchange (PSE), what must a client establish prior to executing the short sale order?

• AA Securities Borrowing and Lending (SBL) agreement to secure the target shares.
• BA margin account with at least 80% initial equity in cash.
• CA written guarantee from a commercial bank confirming lines of credit.
• DAn option contract giving the client the right to buy the shares at a discount.

Under the Philippine Stock Exchange (PSE) short selling guidelines, which securities are eligible for short selling?

• AAll securities listed on the PSE Main Board without exception.
• BOnly newly listed companies during their first 90 days of trading.
• COnly non-dividend paying small-cap companies with high volatility.
• DConstituents of the PSE Index (PSEi), select MidCap/Dividend Yield stocks, and Exchange-T…

What is the maximum limit on the total outstanding short position (short interest) for any eligible security traded on the PSE?

• A5% of the security's outstanding shares.
• B20% of the security's outstanding shares.
• C10% of the security's outstanding shares.
• D50% of the security's outstanding shares.

How are odd lot orders handled on the Philippine Stock Exchange (PSE)?

• AThey are matched only on the specialized Odd Lot Board and cannot match with regular boar…
• BThey are automatically rounded up to the nearest board lot at the broker's expense.
• CThey are matched directly against board lot orders on the main trading board.
• DThey are rejected by the system and can only be traded over-the-counter (OTC).

If a clearing broker fails to deliver the required securities to the Securities Clearing Corporation of the Philippines (SCCP) on settlement date, how is the default resolved?

• AThe transaction is automatically cancelled, and both parties are returned to their pre-tr…
• BThe purchasing client must wait indefinitely until the defaulting broker acquires the sha…
• CThe SCCP initiates a buy-in process using its clearing fund to purchase the securities in…
• DThe SEC suspends the broker's license immediately and liquidates the broker's entire asse…

What is the significance of the Clearing and Trade Guaranty Fund (CTGF) administered by the SCCP?

• AIt protects investors against losses resulting from corporate bankruptcies.
• BIt provides insurance cover for physical theft of stock certificates from broker vaults.
• CIt guarantees the settlement of trades in the event of a clearing member's default.
• DIt is a fund used to pay dividends to shareholders when listed companies default.

Which of the following describes the operational structure of a 'cross transaction' on the Philippine Stock Exchange (PSE)?

• AA transaction that matches a local buyer with a foreign seller outside PSE hours.
• BA transaction involving the exchange of local equities for foreign bonds.
• CA transaction where a single broker represents both the buying client and the selling cli…
• DA transaction that must be cleared by a foreign clearinghouse rather than the SCCP.

During the transition period from T+3 to T+2 settlement in the Philippines, how did the SCCP handle trades executed on the final T+3 trading day (August 23, 2023) and the first T+2 trading day (August 24, 2023)?

• ATrades from August 23 were cancelled, and only T+2 trades from August 24 were settled.
• BTrades from both days were settled on the same date (August 29, 2023) due to a national h…
• CThe T+3 trades were settled on August 28, and the T+2 trades were settled on August 26.
• DSCCP suspended all trading on August 24 to clear the T+3 backlog first.

Under the SEC-approved PSE rules, if a trading halt is imposed on a security due to the sudden dissemination of material information, how long does the halt typically last?

• A15 minutes exactly, with immediate trading resumption.
• B50 minutes (consisting of a 30-minute halt and a 20-minute look-back/post-halt phase).
• CA minimum of 24 hours, extending to the next trading day.
• D120 minutes, with no order entry allowed during the entire period.

Which of the following correctly describes the relationship between the Philippine Depository and Trust Corporation (PDTC) and the Securities Clearing Corporation of the Philippines (SCCP) during settlement?

• ASCCP holds the physical shares in custody, while PDTC clears the cash payments.
• BPDTC acts as the guarantor of the trades, while SCCP maintains the shareholder registry.
• CPDTC is a subsidiary of SCCP that handles broker audits and capital adequacy checks.
• DSCCP calculates the net obligations of cash and securities, and instructs PDTC to move th…

What is the rule regarding the 'price-time priority' in the PSE order matching engine during the pre-open phase?

• AOrders are matched continuously as they arrive, ignoring price limits.
• BOnly orders from institutional brokers are matched first, regardless of timing.
• COrders are matched based purely on transaction size (volume priority) rather than price.
• DOrders are matched at a single calculated equilibrium price, with price priority taking p…

How does a 'trading suspension' differ from a 'trading halt' on the Philippine Stock Exchange (PSE)?

• AA halt is mandated by the SEC, while a suspension is decided exclusively by the broker-de…
• BA halt is a temporary pause (usually under an hour) for information dissemination, wherea…
• CA suspension allows order entry but no matching, while a halt blocks all order entry.
• DThere is no legal or operational difference; the terms are used interchangeably by the PS…

What is the maximum allowable percentage increase (static ceiling) for a stock's price on the PSE in a single trading day?

• A30% above the previous day's reference price
• B50% above the previous day's reference price
• C100% above the previous day's reference price
• D10% above the previous day's reference price

What is the maximum allowable percentage decrease (static floor) for a stock's price on the PSE in a single trading day?

• A30% below the previous day's reference price
• B50% below the previous day's reference price
• C10% below the previous day's reference price
• D25% below the previous day's reference price

Which order type on the PSE is executed immediately at the best available price in the market, without a specified price limit?

• ALimit Order
• BMarket Order
• CStop-Limit Order
• DDiscretionary Order

What determines the minimum number of shares that can be traded in a standard transaction (Board Lot) on the PSE?

• AThe total market capitalization of the company.
• BThe volume of shares traded in the previous session.
• CThe number of public shareholders of the company.
• DThe price range of the stock.

What is the minimum value required for a transaction to be executed as an ordinary block sale on the PSE?

• APHP 5 million
• BPHP 10 million
• CPHP 50 million
• DPHP 20 million

What is the minimum value required for a transaction to be executed as a special block sale on the PSE?

• APHP 10 million
• BPHP 50 million
• CPHP 20 million
• DPHP 100 million

If a stock's reference price on the PSE is PHP 10.00, what is the maximum price (ceiling) at which a buy order can be accepted for that stock on that day?

• APHP 13.00
• BPHP 20.00
• CPHP 11.00
• DPHP 15.00

If a stock's reference price on the PSE is PHP 100.00, what is the minimum price (floor) at which a sell order can be accepted for that stock on that day?

• APHP 50.00
• BPHP 70.00
• CPHP 90.00
• DPHP 80.00

What is the primary function of the 'dynamic threshold' price limit on the PSE?

• ATo establish the permanent opening and closing prices for the day.
• BTo adjust the board lot sizes automatically based on daily trading volume.
• CTo limit the commission rates that brokers can charge their clients.
• DTo prevent sudden, temporary price spikes or drops by rejecting orders that deviate too f…

Under PSE rules, what is the tick size (minimum price fluctuation) for a stock trading in the price range of PHP 10.00 to PHP 49.95?

• APHP 0.01
• BPHP 0.05
• CPHP 0.10
• DPHP 0.50

What is the standard board lot size for a stock priced between PHP 50.00 and PHP 99.95 on the PSE?

• A10 shares
• B100 shares
• C1,000 shares
• D50 shares

If a client places a limit order to buy 155 shares of a stock priced at PHP 60.00, how will the order be executed under PSE board lot rules?

• AThe entire order of 155 shares will be executed on the main board.
• B150 shares will be routed to the main board, and 5 shares will be routed to the Odd Lot B…
• CThe order will be rejected automatically because 155 is not a multiple of 10.
• DThe broker must purchase 160 shares and hold the remaining 5 shares in the broker's error…

Which of the following describes a 'limit order' on the PSE?

• AAn order that must be executed within 60 seconds or it is cancelled.
• BAn order that limits the broker's liability for execution errors.
• CAn order to buy or sell a security at a specified price or better.
• DAn order to buy a stock only when it reaches its daily floor price.

What is the pricing restriction for executing ordinary block sales on the PSE?

• AThe price must match the exact opening price of the day.
• BThe price can be set at any level, including outside the daily static limits.
• CThe price must be within +/- 5% of the last traded price or reference price.
• DThe price must be at least 10% higher than the current market price.

Which of the following PSE order validity qualifiers specifies that the order must be executed immediately in full or in part, with any unexecuted portion cancelled?

• AFill-or-Kill (FOK)
• BGood-Til-Cancelled (GTC)
• CImmediate-or-Cancel (IOC)
• DDay Order

Under what condition can a 'special block sale' be priced outside the standard +/- 5% price band on the PSE?

• AIt can be done automatically if the transaction value exceeds PHP 500 million.
• BIt requires explicit application to and approval by the PSE Board or Management, justifie…
• CIt is allowed if both the buyer and seller are registered foreign institutional investors.
• DIt can be executed without approval if it occurs during the pre-close trading phase.

A client wants to execute a short sale order. The last transaction for the stock was at PHP 25.00 (which was an uptick from PHP 24.95). According to the uptick rule, what is the lowest price at which the short sale order can be executed?

• APHP 24.95
• BPHP 25.05
• CPHP 24.90
• DPHP 25.00

What happens to an order that is routed to the PSE matching engine when a stock has triggered its dynamic threshold?

• AThe order is executed automatically at the static ceiling price.
• BThe order is converted into a market order and matched against any available price.
• CThe order is rejected, and trading in that security is temporarily frozen to allow the SR…
• DThe order is held in queue and matched only during the run-off phase.

Under the PSE rules, how is the reference price established for the daily static ceiling and floor calculations of a stock that did not trade in the previous session?

• AThe par value of the stock as stated in the corporate charter.
• BThe average closing price of the stock over the past 30 calendar days.
• CThe book value per share calculated from the latest quarterly report.
• DThe last adjusted closing price (LACP) or the closing price of the last day the stock tra…

Which of the following order types is NOT permitted on the PSE trading system?

• AGood-Til-Date (GTD) orders extending beyond 30 calendar days.
• BGood-Til-Cancelled (GTC) orders.
• CImmediate-or-Cancel (IOC) orders.
• DStop-Limit orders.

Under the Securities Regulation Code (SRC) rules, what is the initial margin deposit required for a client to open a margin account?

• A30% of the purchase price of the securities.
• B50% of the purchase price of the securities.
• C25% of the purchase price of the securities.
• D75% of the purchase price of the securities.

Under the SEC rules for margin accounts in the Philippines, what is the minimum regulatory maintenance margin requirement for long equity positions?

• A25% of the current market value of the securities.
• B50% of the current market value of the securities.
• C30% of the current market value of the securities.
• D15% of the current market value of the securities.

Under the SEC rules for margin accounts in the Philippines, what is the minimum regulatory maintenance margin requirement for short equity positions?

• A25% of the current market value of the securities.
• B30% of the current market value of the securities.
• C50% of the current market value of the securities.
• D10% of the current market value of the securities.

What is the primary objective of the Know-Your-Customer (KYC) process in the Philippine securities industry?

• ATo guarantee that the client will make a profit on their stock investments.
• BTo verify the client's identity, source of funds, and risk profile to prevent fraud and m…
• CTo collect tax payments directly from the client's account on behalf of the BIR.
• DTo determine which specific stock the client must buy under a mandatory allocation.

Before a broker-dealer can execute a trade on behalf of a client, what document must be signed and on file?

• ACustomer Account Agreement (CAA)
• BSecurities Borrowing and Lending Agreement
• CDiscretionary Trading Authorization Form
• DAssociated Person Certification Form

What is a 'discretionary account' in the context of securities trading?

• AAn account that is exempt from paying standard trading taxes and transaction fees.
• BAn account used exclusively by corporate directors to buy shares in their own companies.
• CAn account where the client permits the broker-dealer to buy and sell securities without…
• DAn account that allows the client to trade without undergoing KYC verification.

Under the SEC rules, how must discretionary trading authority be granted by a client to a broker-dealer?

• AIt can be granted verbally during a recorded phone call.
• BIt is automatically granted to the broker upon the opening of any standard account.
• CIt must be granted in writing through a specific power of attorney or discretionary agree…
• DIt can be implied if the client does not answer the broker's calls for three consecutive…