NoCD, a transparency tool

Published July 23, 2021, 6:00 AM

by Fil C. Sionil

When the big brother sneezed, we caught a cold. This illustrates exactly how the domestic financial markets – the stock and the foreign exchange – respond to news emanating from Wall Street.

Most  market watchers and analysts lament that we basically follow the cue from the US. On Monday, the Dow Jones Industrial, S&P 500 and Nasdaq came sliding down, and like a prompt, the local bourse took the same path with the Philippine Stock Index slipping to slightly above 6,500 as the outlook remains grim. The expectation is for the bear to linger on. The geo-political situation is driving the investors’ sentiments into the negative territory. 

As a small-time investor, this development, which I monitor on a daily basis, makes me cringe a bit. By force of circumstance, I then turn into a medium-term investor instead of short term, as in, in and out.

The risk aversion brought about by the confluence of unfolding events offshore and onshore – is spawning uncertainty in how long this pandemic will last, its ever-evolving variants and more virulent mutations, the government’s responses and the 2022 general elections – may further send the local bourse spinning, breaching the 6,000 threshold.

And the recent news of R&L Investment-Venture Securities alleged fraudulent activities, prompting the Securities and Exchange Commission to revoke their trading license may also be a concern.

Though, Venture Securities disagrees with the ruling, stressing that it “has not committed any fraudulent act nor are we the proximate cause of any fraud which may have led to the collapse of R&L Investments.” It is currently seeking redress.

Market regulators, taking cognizance of the event, have instituted measures that trading must be done by one person and the check and balances, oversight function, should done by another, including settlement of accounts.

However, full compliance may not have been adhered to. Definitely, reforms in auditing and compliance are being instituted. PSE is now campaigning, pushing for more investors to subscribe to “NoCD Facility,” a depository product of the Philippine Depository and Trust Corp. (PDTC).

It is offered to Broker Depository Participants to enable the participants to maintain client securities holdings held under their omnibus broker account in a segregated set-up. This platform allows the recording of securities at the beneficial owner level lodged with PDTC.

Though I am a small market investor, PSE chief operating officer Roel Rafran advised me to subscribe to NoCD for trade surveillance and transparency.

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