CHAPTER 12 Prepared by Group 3 March 2, 2012 / FRIDAY

Is a conduit for distribution of outstanding issues of securities. It is an economic institute which take place the sale and purchase of security base on the demand and supply of the economy. There are two components of securities market: A. Auction-Type Market
A-1. International Stock Exchange A-2. National Stock Exchange

B. Negotiation-Type Market
B-1. Over-The-Counter Market

 A system in which buyers enter competitive bid and sellers enter competitive offers simultaneously. Quick, swift trading and open-to public. Auction is preferred means for many investors, because of the excitement of bidding process. The securities are sold to the highest bidders. Examples of AUCTION-TYPE MARKETS: International and National Stock Exchange. NYSE the largest stock exchange in the world as of 2005. PSE smallest stock exchange as of 2005.

 the Stock Exchange is the organization that provides the facilities for the buying and selling of securities like stocks, bonds and derivatives. The Philippine Stock Exchange (PSE) is the only operating stock exchange in the Philippines and has two trading floors located at the PSE Centre in Pasig City and at the PSE Plaza in Makati City.
Sectors of Philippine Exchange
A. Banks and Financial Services

B. Commercial, Industrial and Services C. Property D. Mining E. Oil F. Holding Firms

GAINERS:
Company Name
CENTURY PROPERTIES GROUP INC.

LOSERS:
SECTOR Property
Holding Firms

CODE CPG

Company Name
GREENERGY HOLDINGS INC

CODE
GREEN

SECTOR
Industrial Property

ZEUS HOLDINGS, INC.

LEPANTO MINING A

ZHI
LC PHES MA BHI DIZ LR WPI VITA

MRC ALLIED INC

STA LUCIA LAND

MRC SLI PCAV

Mining Property Mining

Holding Firms

Property Services

PHILIPPINE ESTATES CORP

MANILA MINING-A

PLDT COMMUNICATIONS AND ENERGY VENTURES, INC

ATOK BIG WEDGE

BOULEVARD HOLDINGS, INC.

DIZON COPPER-SILVER MINES, INC. LEISURE & RESORTS WORLD CORP WATERFRONT PHILIPPINES, INC VITARICH CORPORATION

AB

Mining
Industrial

Mining Services Services Industrial

ALPHALAND CORP
CEBU AIR INC INTEGRATED MICROELECTRONICS HOLCIM PHILIPPINES PHILIPPINE STOCK EXCHANGE INC.

ALPHA
CEB IMI HLCM PSE

Services Industrial Industrial Financial

 OTC is also known as market for unlisted securities, because the company is small or unable to meet the exchange listing requirements. These securities are traded by middlemen like Broker, Dealer, Salesmen, and Associated person through use of e-mails, telephone, and any other means of communication. They negotiate the final price. Broker - is the person who engaged in buying and selling securities for account of others. Dealer - any person who buy and sell securities for his/her account. Salesman - is a natural person, employed as an agent by a dealer. Associated Person of Broker/Dealer an employee who directly exercise the control of authority. ***ALL OF THESE PERSON ARE REQUIRED BY THE LAW TO REGISTERED with Securities and Exchange Commission & all of the transaction should be in legal terms.***

STOCK EXHANGE

OVER-THE-COUNTER

1. Exchange transactions are carried out on the floor by its members. 2. The facilitator of exchange in stock market is called Broker, usually paid by commission. 3. Securities are exposed to public, less selling effort is required. 4. Complete record of transaction is available almost immediately to all participants.

1. Dealers acts as principals. 2. The facilitator in OTC market is called dealer and earned by selling at mark-up

3. Securities are NOT exposed to public, more selling effort is required.

4. Bid and asked prices are made available to interested parties.

Illustration 1: Buying securities

If we assume that an investor buys 2,000 shares of stock at a market price of P5.00 per share with a par value of P1.00, the computation for the total cost of the transaction is as follows:
Investment cost (2,000 shares x P5.00)
Add:

P10, 000.00

Brokers' commission (10,000.00 x 1.5%)

10% VAT on brokers' commission

150.00 15.00 100.00 10.00 0.92

Transfer fee
10% VAT on transfer fee
PCD fee (10,000.00 x 0.00009174) Documentary stamp tax [(2,000 shares x P1.00) x P1.50]

15.00

200 Total cost of the transaction

P10, 290.92

Illustration 2: Selling securities For an investor who sells 500 shares at a market price of P20.00 per share, the computation is as follows:

Sale proceeds (500 shares x P20.00)

P10, 000.00

Less:
Brokers' commission (10,000.00 x 1.5%) 10% VAT on brokers' commission Stock transaction tax (10,000.00 x 0.005) Cancellation fee 10% VAT on the cancellation fee PCD Fee (10,000.00 x 0.00009174) Net amount to be received 150.00 15.00 50.00 20.00 2.00 0.92 P9, 762.08

 Trading at the PSE is from 9:30 a.m. to 12:00 noon in a continuous session daily, except Saturdays and Sundays, legal holidays and days when the Banko Sentral ng Pilipinas (BSP) Clearing Office is closed.

PRICE OF STOCKS and METHOD OF TRADING:

The price of stocks and volume of trading securities market vary from day-to-day depending on the demand and supply and the Method of transaction between buyer is a double auction market.

The end.