In the BusinessCoach’s How to Invest in the Stock Market seminar I attended last April 16, 2011, Jay G. Peñaflor, a Philippine Stock Exchange Sr. Market Education Specialist, told us that the process of opening an account with a stock broker is similar to opening a bank account. You will be required to fill out a form called Customer Account Information Form or CAIF and submit the following documents, namely:
• Two (2) valid IDS
• Specimen signature cards, and
• Proof of billing.
Depending on your stock broker, you may also asked to provide an initial cash deposit in order to begin investing in the stock market.
For overseas Filipinos, the simplest and most convenient way of investing in the Philippine stock market is to open a stockbrokerage account with an online stockbroker like CitisecOnline, AB Capital Securities, Inc., Accord Capital Equities Corporation, BPI Securities Corporation, Diversified Securities, Inc., F. Yap Securities, Inc., First Metro Securities Brokerage Corporation, RCBC Securities, Inc. or apply directly to any overseas branches of Philippine banks that are affiliated to any of the active stockbrokerages in the PSE. Through the internet, overseas investors will be able to access the Philippine stock market and trade stocks real-time.
Overseas Investors can also participate in the Philippine stock market through mutual funds, and index and variable-linked funds offered by various financial institutions such as banks, mutual fund management companies and insurance firms in the Philippines.
How You Can Place an Order?
Placing an order to buy or sell a stock can be done by making a telephone call (or sending a text message) to your stockbroker or directly online via the Internet. All buying and selling orders are subject to a minimum number of shares as prescribed by the board lot table instituted by the PSE. Prices in the stock market may fluctuate according to the set intervals based on the price level of the shares.
Once your order has been carried out, your stockbroker will give you a confirmation invoice showing the details of your transaction.
For traditional brokers, settlement of all transactions, either buying or selling is usually done after three (3) working days from the transaction date or T+3. This means that the buyer must pay for the costs of the transaction to this stockbroker within 3 working days after the trade was done. Similarly, the seller will receive the proceeds of the sale from the broker after the 3rd day from the transaction date.
For online brokers, settlement of all transactions is done on the transaction date. To buy shares of stock, you will need to fund your account prior to any purchase. In the same manner, the proceeds of your sale will be credited to your account not later than 3 working days from the transaction date.
Trading in the Philippine stock market is daily, Mondays to Fridays, except during holidays or when the Bangko Sentral ng Pilipinas Clearing Office is closed. Effective January 02, 2012, trading hours are from 9:30 a.m. to 3:30 p.m., the morning session is from 9:30 a.m. to noon, while the afternoon session starts at 1:30 p.m. until 3:30 p.m. Note that you can start placing your orders 30 minutes before the market opens or at 9:00 a.m.
What are the Costs of Trading?
These are the basic charges involved in buying and selling stocks:
1. Stockbroker’s commission plus 12% Value-added Tax on commissions (varies depending on stockbrokers fee structure) – 0.25% to 1.5% of transaction amount or a minimum of Php20.00, whichever is higher.
2. Clearing Fee – 0.01% of transaction amount
3. PSE Transaction Fee – 1/200 of 1% of transaction amount
4. Stock transaction tax – 0.5% of transaction amount
If you want to exercise your trading skills and gain more confidence before actually investing, you can try the PSE Stock Trading Game. To join, log on to the PSE website (www.pse.com.ph) and click the Stock Trading Game link found at the left hand side of the PSE home page.
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