What
is the Philippine Central Depository, Inc. (PCD)?
PCD is a private
institution established in March 1995 to
improve operations in securities
transactions. PCD seeks to provide a fast,
safe and highly efficient system for
securities settlement.
Regulated by the Securities and Exchange
Commission, PCD is owned by various
financial institutions. Its shareholders
are: Philippine Stock Exchange (31.75%),
Bankers Association of
the Philippines (31.75%), Financial
Executives Institute of the Philippines
(10%), Development Bank of the Philippines
(10%), Investment House Association of the
Philippines (6.5%), Social
Security System (5%) and Citibank N.A. (5%).
What
is book-entry system (BES)?
PCD uses book-entry
system to record the ownership of shares.
When a trade is done at the Philippine Stock
Exchange (PSE), securities are moved via
electronic debit and credit of Participants'
securities accounts to effect settlement.
There will be no need for the physical
movement of stock certificates (scrip)
between buyer and seller.
What
is scripless trading?
Scripless trading is a
trading system where settlement is carried
out via BES, rather than by the physical
movement of certificates and documents.
What
is settlement?
Settlement is the
completion of a transaction. This is the
actual exchange of securities and funds.
What
is PCD's role in the equities market?
PCD is basically a
provider of the depository and settlement
system for securities. Trades matched at PSE
are sent to PCD for settlement purposes.
Settlement is electronically recorded as
increases or decreases in Participants'
Securities Accounts.
Who
are the Participants of PCD?
Participants to PCD
are all PSE-member brokers, custodian banks,
institutional investors and other
corporations or institutions that are active
players in the Philippine equity market.
How do
I deposit shares in PCD?
Called the lodgment
process, a stockholder or investor can
deposit stock certificates through a PCD
Participant. Participants lodge physical
stock certificates in exchange for
book-entry credits
in the records of PCD.
What
happens to the certificates lodged in PCD?
Who owns them?
The share certificates
sent to PCD for lodgment are delivered to
the appropriate stock transfer agents (TA).
Upon verification, these certificates are
canceled by the TA and re-registered in the
name of PCD Nominee Corporation (PCNC). PCNC
is a duly registered institution wholly
owned by PCD. PCNC acts as trustee-nominee
for all shares lodged in the PCD system.
Beneficial ownership of the shares remains
with the lodging stockholder. PCNC, by
policy, does not vote the shares in its
name.
After
I lodge, how will I know my account balance?
You may check your
account balance with your broker. Your
broker should have customer ledgers
maintained in his backroom that reflects
your cash and stock position and other
essential facts.
After
checking my account balance with my broker,
can I countercheck with PCD?
PCD records display
only the Participant (brokers, custodian
banks and other institutional participants)
level of ownership. It will only show your
account balance if your broker sponsored a
PCD sub-account for you. If a sub-account
has been opened for you, PCD can generate a
report for you with written authorization
from your broker. A sub-account is charged a
monthly maintenance fee of P100 regardless
of the number and quantity of securities
held by the
investor.
Is it
mandatory to lodge my shares in PCD?
Yes and No. You have
the option to lodge your shares in PCD or
hold on to your stock certificates. But when
you sell your shares at the PSE, lodgment is
necessary for certificated shares because
the shares will have to be in BES to be used
for settlement. It is important for the
shares to be in the PCD system by the
settlement cut-off time on settlement date
to avoid penalties imposed on brokers by PSE
for failed trades due to delayed or
non-deliveries of securities. The penalty as
well as the cancellation fee (charged by the
TA) per certificate may be passed on to you
by your broker.
When I
buy shares at the PSE, can I still expect a
certificate?
Since settlement of
all shares listed at the PSE have been
converted to BES, you will not receive a
stock certificate. If you want one, you will
have to specify to your broker that you want
a stock certificate for the shares that you
bought.
If I
want a stock certificate, can I withdraw my
shares from PCD?
Yes. You may request a
withdrawal of certificates at any time.
Investors who opt to hold physical stock
certificates may uplift their shares in BES.
Similar to lodgment, the process of
upliftment should be coursed through a
Participant. However, when these
certificated shares are eventually sold at
the PSE, they will have to be re-lodged in
the PCD system for settlement purposes.
UPLIFTMENT PROCESS
What
happens to my shares if PCD goes bankrupt?
PCD is a separate
entity from PCNC as described earlier.
Should PCD go bankrupt, the shares
registered under PCNC are not affected.
Who
gets the dividends and how are they
distributed to the shareholders?
Cash and stock
dividend distribution is automated in the
PCD system. PCNC receives the stock dividend
certificate from the Issuer/TA for the
shares lodged in PCD. These shares are
appropriately distributed to the
Participants on payment/listing date via
book-entry credits.
Participants see their due credit of shares
in their securities accounts and are
responsible for distributing the credited
shares to their clients' records.
Cash dividends are handled in a similar
manner. PCNC receives the cash dividend
check from the Issuer/TA and distributes the
money to the Participants through the PCD-designated
disbursing banks. Participants see their due
credit on payment date in their respective
bank accounts and are responsible for
distributing the cash dividends to their
clients based on their agreed procedures.
How
about the other corporate actions?
For shareholders
meeting of a listed company, a stockholder
whose shares are in BES will receive the
proxy materials from his broker. The
stockholder will then return the
accomplished proxy form to his broker, who
in turn delivers the said form to the
transfer agent.
As an investor, you should inform your
broker that you are expecting a proxy form.
Your broker should also do his part by
promptly sending you the proxy form.
For rights offering, the stockholder can
lodge the shares in PCD as soon as he
receives the stock certificate for the
shares he purchased in relation to the said
offering.
What
are the pros and cons of retaining holdings
in BES vs. asking for a certificate?
How do I transfer my
lodged shares from one broker to another?
Simply advise your broker in writing
specifying the name of the issue, the number
of shares and the name of the broker where
your shares will be transferred. Your broker
will accomplish an "out" receipt and move
the shares electronically through the PCD
system to the other broker.
You will also have to advise the other
broker of the transfer because he will have
to prepare an "in" receipt and receive the
shares electronically through the PCD system
from your original
broker.
Note that when you transfer brokers, your
brokers will be charged P82.50 per side per
stock moved (e.g., SMC, ABA) or a total of
P165 per stock. Both brokers might pass
these costs to
you.
