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SEC Phase 2-7E Proprietary/Non-Proprietary Securities (Timeshare) Salesman (PNPSS) Exam — Philippines

Practice Questions100 questions

2026 Statistics

Key Facts: SEC CO/AP Exam

75%

Passing Score

SEC Philippines

Php 300

Examination Fee

SEC/PSE

T+2

Settlement Cycle

SCCP (since 2023)

110%

Minimum RBCA Ratio

SEC Rule 49.1

Php 500k+

AMLA CTR Threshold

RA 9160

10% Cap

Short Position Limit

PSE Rules

The Philippine SEC Compliance Officer / Associated Person (CO/AP) Exam requires a passing score of 75% under the Phase 2-7D licensing track. Administered by the Securities and Exchange Commission (SEC) in partnership with SROs, it certifies capital market professionals in the Securities Regulation Code (SRC), PSE trading rules, AMLA, and Net Capital / Risk-Based Capital Adequacy (RBCA) requirements, qualifying them to manage compliance operations for broker-dealers.

Sample SEC CO/AP Practice Questions

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1Under Section 8 of the Securities Regulation Code (SRC) of the Philippines, what is the general rule regarding the sale or distribution of securities?

A.Securities cannot be sold or offered for sale without a registration statement filed with and approved by the SEC.

B.Securities can be sold freely provided the issuer is a registered corporation with the SEC.

C.Registration is only required if the securities are sold to more than 100 retail investors.

D.Securities of private corporations are exempt from registration, while public corporations must register.

Explanation: Section 8.1 of the Securities Regulation Code (SRC) states that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Securities and Exchange Commission (SEC). This registration requirement protects the investing public by ensuring full disclosure of material facts.

2Which of the following is classified as an 'Exempt Security' under Section 9 of the Securities Regulation Code (SRC) and is therefore exempt from SEC registration?

A.A bond issued by a private real estate developer listed on the PSE.

B.A security issued or guaranteed by the Government of the Philippines.

C.Common shares of stock issued by a newly incorporated local manufacturing company.

D.Debentures issued by an investment house for public distribution.

Explanation: Section 9.1(a) of the SRC exempts any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof, or by any government-controlled entity, from registration. Government securities are deemed low risk in terms of default and regulatory oversight.

3Under Section 9.1 of the SRC, which of the following banks' securities is exempt from registration requirements?

A.Any security issued by a bank except its own shares of stock.

B.Common shares issued by a commercial bank to increase its capital.

C.Bonds issued by a foreign bank's parent company abroad.

D.Preferred shares issued by a thrift bank to the public.

Explanation: Section 9.1(e) of the SRC exempts any security issued by a bank itself except its own shares of stock. Therefore, bank products like certificates of deposit are exempt, but the bank's own equity shares (common or preferred) must still be registered.

4Which transaction is classified as an 'Exempt Transaction' under Section 10.1 of the Securities Regulation Code, requiring no prior registration of the securities sold?

A.The public offering of mutual fund shares by an investment company.

B.A sale of securities by an executor or administrator at a judicial sale.

C.An online public subscription campaign for corporate bonds.

D.A commercial distribution of convertible debentures to retail investors.

Explanation: Section 10.1(a) of the SRC provides that judicial sales, or sales by an executor, administrator, guardian, receiver, or trustee in insolvency or bankruptcy, are exempt transactions. The court supervision in these proceedings ensures investor protection and transparency.

5Under Section 10.1(k) of the SRC, the sale of securities to qualified buyers is an exempt transaction. Who among the following is NOT automatically considered a qualified buyer?

A.A registered investment company (mutual fund).

B.A licensed insurance company.

C.An individual retail investor with a net worth of Php 5 million.

D.A licensed bank or trust company.

Explanation: Under the SRC and its IRR, qualified buyers include institutional entities like banks, insurance companies, investment houses, and pension funds. Individual retail investors, even with a net worth of Php 5 million, are not automatically qualified buyers unless they are certified as qualified individual buyers under the higher wealth/sophistication thresholds set by the SEC (typically net worth of Php 30 million or annual income of Php 10 million).

6What is the limit on the number of non-qualified buyers to whom securities may be sold in the Philippines within a 12-month period to maintain the private placement exemption under Section 10.1(i) of the SRC?

A.Fewer than 20 persons

B.Fewer than 50 persons

C.Fewer than 100 persons

D.There is no limit, provided no commission is paid to sales agents.

Explanation: Section 10.1(i) of the SRC (the 'under 20 rule') exempts the sale of securities by an issuer to fewer than 20 persons in the Philippines during any 12-month period. Once the number of purchasers reaches 20, the transaction is deemed a public offering requiring registration.

7Under SEC Memorandum Circular No. 11, Series of 2025, which of the following is true regarding transactions falling under Section 10.1 of the SRC?

A.Filing a notice of exemption or paying exemption fees is no longer required to claim the Section 10.1 exemption.

B.A formal written application for exemption must be approved by the SEC before executing the transaction.

C.The issuer must pay a fee equal to 1% of the total transaction value.

D.No notice is required, but a 10% withholding tax on the issued securities is automatically applied.

Explanation: To streamline operations, the SEC implemented rules stating that transactions strictly falling under Section 10.1 of the SRC do not require filing a notice of exemption or paying confirmation fees to claim the exemption. The exemption arises by operation of law.

8Under the Securities Regulation Code, what is the definition of an 'Investment Contract' as established by jurisprudence in the Philippines?

A.A contract where a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others.

B.Any agreement between two parties for the purchase of real estate assets.

C.A contract of deposit with a commercial bank that pays a fixed interest rate.

D.A partnership agreement where all partners actively manage the day-to-day business.

Explanation: Philippine law adopts the Howey Test framework for defining an 'investment contract' (a type of security): there must be (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profits, (4) primarily from the efforts of others. If these elements are met, the instrument is a security and must be registered.

9Which of the following describes a 'Firm Commitment' underwriting agreement under Philippine SEC rules?

A.The underwriter commits to purchasing all unsold shares from the issuer, taking on the inventory risk.

B.The underwriter only commits to using its best efforts to sell the securities, returning any unsold shares to the issuer.

C.The underwriter guarantees the stock price will rise by at least 10% in the secondary market.

D.The issuer commits to paying the underwriter a fixed fee regardless of how many shares are sold.

Explanation: In a firm commitment underwriting, the underwriter (investment house) agrees to buy the entire offering of securities from the issuer and resell them to the public. If any shares remain unsold, the underwriter must hold them, thereby absorbing the financial risk.

10Under the SRC, who is considered an 'Insider' in relation to a material non-public information?

A.Only the directors and the chief executive officer of the issuer.

B.The issuer, directors, officers, controlling persons, or anyone who receives material non-public information from them.

C.Any retail shareholder who owns at least 100 shares of the issuer.

D.Only exchange officials and SEC commissioners who have regulatory access to corporate records.

Explanation: Section 3.8 of the SRC defines an 'insider' broadly to include: (1) the issuer, (2) directors or officers, (3) controlling persons, (4) persons with access to the information due to their relationship with the issuer, and (5) anyone who learns such information from any of the foregoing (tippees).

About the SEC CO/AP Exam

Specialized certification exam for Compliance Officers and Associated Persons in the Philippines. Covers the Securities Regulation Code (SRC), PSE trading regulations, anti-money laundering (AMLA), and broker-dealer Net Capital/RBCA compliance guidelines.

Questions

100 scored questions

Time Limit

2 hours

Passing Score

75%

Exam Fee

Php 300.00 (Securities and Exchange Commission (SEC) Philippines)

SEC CO/AP Exam Content Outline

30%

Securities Regulation Code (SRC)

Exempt securities and transactions, registration guidelines, tender offer thresholds, and prohibited trading practices

25%

PSE Trading Regulations & SBL/Short Selling

Stock price limits (ceilings and floors), calculated opening COP, T+2 settlement cycle, and short selling uptick/SBL borrowing rules

25%

Anti-Money Laundering Act (AMLA)

Covered transaction (Php 500,000) reporting, suspicious transaction reports (STR) within the next working day, KYC/EDD, and tipping-off penalties

20%

Broker-Dealer Guidelines & RBCA Risk Management

Net Capital thresholds (Php 5M), aggregate indebtedness ratio (2,000% max), RBCA ratio (110% min), customer segregation, and WSP supervision

How to Pass the SEC CO/AP Exam

What You Need to Know

Passing score: 75%
Exam length: 100 questions
Time limit: 2 hours
Exam fee: Php 300.00

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

SEC CO/AP Study Tips from Top Performers

1Familiarize yourself with the key sections of R.A. 8799 (SRC) and its Implementing Rules and Regulations.

2Understand calculations for Net Capital, Aggregate Indebtedness ratio, and RBCA ratio, including early warning triggers.

3Study all AMLA red flags, reporting timelines (5 working days for CTRs, next working day for STRs), and penalties.

4Review the PSE board lot table, tick sizes, static thresholds (ceiling +50%, floor -30%), and block sale rules.

5Ensure you memorize the details of short selling limits (10% outstanding position cap) and the SBL borrowing rules.

Frequently Asked Questions

What is the passing score for the SEC Compliance Officer / Associated Person exam?

The passing score for the examination is 75% or higher. The exam contains multiple-choice questions covering regulatory framework and technical computations (such as Net Capital or RBCA calculations).

What are the core topic weightings in the SEC CO/AP exam?

The exam is divided into four major areas: (1) Securities Regulation Code (SRC) at 30%, (2) PSE Trading Regulations and Short Selling at 25%, (3) Anti-Money Laundering Act (AMLA) compliance at 25%, and (4) Broker-Dealer Guidelines and RBCA risk management at 20%.

What is the covered transaction threshold under Philippine AMLA rules?

Under the AMLA, a Covered Transaction Report (CTR) must be filed for cash or equivalent monetary instrument transactions exceeding Php 500,000.00 within one banking day. Covered transactions must be reported to the AMLC within five (5) working days.

What is the reporting timeline for a Suspicious Transaction Report (STR)?

Unlike CTRs, Suspicious Transaction Reports (STRs) have no monetary threshold and must be filed within the next working day following the occurrence of the suspicion (i.e., when the compliance officer determines the suspicious nature of the transaction or attempted transaction).

What are the ongoing capital requirements for a registered broker-dealer?

Under SRC Rule 49.1, broker-dealers must maintain a minimum Net Capital of Php 5 million or 5% of their aggregate indebtedness, whichever is higher, and their aggregate indebtedness must not exceed 2,000% of Net Capital. Additionally, under the RBCA framework, firms must maintain an RBCA ratio of at least 1.10 (110%).

What is the SBL and Short Selling framework on the PSE?

Short selling on the PSE was officially launched in November 2023. Naked short selling is strictly prohibited. Before executing a short sale, clients must have a Securities Borrowing and Lending (SBL) agreement and borrow the shares. Short selling is limited to PSEi, selected MidCap/Dividend Yield stocks, and ETFs, and is capped at a 10% outstanding short position threshold per security. The uptick rule also applies.