Clearing Agencies

1. Three (3) duly accomplished and notarized registration form for Clearing Agencies (Initial: SEC Form 42-CA) ;

2. Board resolution attesting to particulars in the application;

3. Copies of identity cards/passports of directors and persons who control more than ten percent 10% of the applicant;

4. A copy of the Articles of Incorporation indicating that the purpose of the applicant is to engage in the business of a clearing agency and/or securities depository and copy of the By-Laws;

5. A copy of proposed SRO rules shall be submitted to the Commission for approval pursuant to procedures set forth in the Code and IRR;

6. Original signed copy of the audited balance sheet and statement of income and expenses of the applicant, and all notes and schedules thereto as of the end of the last fiscal year;

7. Projected balance sheet and statement of income and expenses for the first five (5) years, including assumptions, in its capacity as (i.) clearing and settlement agent only, (ii.) depository only; and (iii.) both depository and clearing agency;

8. Detailed narrative and graphical description of the proposed business and/or operational model and procedures (e.g., lodgment and upliftment processes, corporate action processes, dividend distribution, proxy issuance, pledge, etc.), recording of ownership and movements of share ownership).

9. Detailed plan of operation and economic justification for operating a clearing agency/securities depository. The plan should describe and analyze the industry and the market area from which the clearing agency/securities depository expects to draw majority of its business and establish a strategy for its ongoing operation. It should also describe how the business will be organized and controlled internally. It should disclose the plan’s target security instrument/s, e.g., equities listed in an Exchange, etc. and target participants. e.g., broker dealer, custodian, etc.

10. Target security instrument/s (e.g., equities listed In an Exchange, etc.)

11. Target participants (e.g., broker dealer, custodian, etc.)

12. Copies of proposed participation agreement/s;

13. Concise statement of the reason for said business proposal and effect of the proposal on the current clearing and settlement environment;

14. Statement on whether the business and/or operational.model of the applicant would require, directly or indirectly, all companies listed in an Exchange to exclusively engage the services of the applicant;

15. Organization Chart, indicating filled and unfilled positions and the identity of persons presently occupying the title or position. The Chart should be accompanied by the list of qualifications/requirements and Statement of Duties and Responsibilities for each position/item;

16. List of the names of participants and of current applications to become participants;

17. Written undertaking to comply and enforce compliance by its participants with relevant provisions of the Code and any amendments thereto, and the implementing rules and regulations and the clearing agency/securities depository rules, as well as with any terms and conditions imposed by the Commission in connection with the registration of the applicant;

18. Copies of all clearing agency/securities depository rules indicating the date/s approved by the Commission or, where not so approved, an indication to this effect. Such rules should include rules which are required under Section 42.2 (d) and (f) of the Code; Provided, however, that drafts of new rules should be provided to the Commission for approval before becoming effective. All rules should reflect new requirements under the Code and rules and regulations adopted thereunder;

19. Identification and description of any qualifications or criteria that have the effect of denying or limiting access or use by any person, including broker dealer and custodian participant or their clients, of the clearing/securities depository system. If such qualifications or criteria are in the rules and procedures already, quote the specific provisions;

20. Identification and description of fair procedures for disciplining clearing/securities depository participants and the penal and/or schedule of sanctions, including suspension and expulsion of participants, quoting the specific provisions of the rules and procedures;

21. Identification and description of procedures and systems to be used, if any, to prevent and/or detect fraudulent and manipulative acts and practices. If these are in the rules and procedures already, quote the specific provisions;

22. Statement of Readiness and Undertaking to link the proposed system with other capital market participants, within and outside of the Philippines;

23. Comprehensive Information Technology Plan, to include among others, a list and brief description of the following:

Software and hardware to be primarily used in its clearing/depository function and their location;

Back-up system or subsystem and their location;

Security system and procedures to be employed;

Procedures to check sufficiency of system’s capacity and expansion program, if necessary; and

IT system maintenance schedule.

24. Business Continuity and Disaster Recovery Plan;

25. Risk Management Manual and Internal Control Procedures;

26. Insurance plan to cover any operational risks and other risks, specifying the type, total amount and risk area;

27. Copies of service contracts/proposed contract of any activities or services that will be outsourced, if any;

28. List and brief justification of proposed schedule of dues, fees and charges for clearing, settlement and/or depository activities;

29. Study made as to comparative fees and charges imposed by other clearing agencies/depositories, if any;

30. Business plan setting forth future plans to ensure prompt and accurate clearance and settlement of securities trading on an Exchange/efficient and accurate securities depository system;

31. Brief description as to any material pending legal proceeding affecting the applicant directly or to which any of its properties or assets, directors, or officers is part of the case.

32. Undertaking to subject the information technology, trading, business continuity and disaster recovery plans, and risk management systems to regular review and audit by an independent firm at least once every three (3) years and such other frequency that the Commission may deem necessary. The results of such review and audit shall be submitted to the Commission within thirty (30) days from completion of the audit.

1. Applicant requests for the necessary registration form from MSRD or download the form, SEC Form 42-CA.

2. File with MSRD the application form and supporting documents for pre-processing by MSRD Specialist.

3. After pre-processing of application and supporting documents and upon notation by the processing Specialist that the application is approved for payment, applicant pays the assessed fee at the Cashier.

4. Upon payment of the assessed fee, applicant shall submit the registration form, supporting documents and proof of payment to MSRD for processing of the application.

5. Receive Certificate of Registration upon approval by the Commission.