How to Invest in the Philippine Stock Market

If you are looking for an investment with high returns and low initial investment then putting your money in
the stock market may be right move for you. Many people have made millions buying and selling stocks.
However, many people too have lost money due to both ignorance and bad luck. To minimize the risk of
loss, a person must have knowledge on how to invest in the stock market wisely.

You must first understand what the stock market is. The stock market is where shares of ownership of
different companies are bought and sold. Since you become a part owner, you participate in the companys
earnings or losses. So while there is a greater chance of high returns, there are also risks. However, history has
shown that over the long term, the profits in stock investments are better than fixed income instruments like
time deposits or government securities.

There are two ways you can earn money on your stock investments. One way is through the appreciation of
your stocks price. The other is through dividends declared by the company. At this point in time, however,
few companies give substantial cash dividends and so most investors rely on the appreciation of the stock,
treating dividends as just a bonus.

The first step to do is to study your own profile as an investor to know how much you can invest. Much will
depend on your financial status and what stage of your career you are in. You can afford to be more
aggressive if you would not be risking funds for your basic needs, your childrens education, or emergencies.

Second is to decide how much to invest. Although you can start stock market investing with just five
thousand pesos with some stock brokers, the more funds you have the better you can diversify your holdings
to minimize risk. Many experts recommend putting not more than twenty five percent of your savings to be
safe. If you are near retiring then you must be very conservative and not put in more than ten percent of your
available resources. Do not risk what you cannot afford to lose.

Third step is to open an account with a reputable stock broker. To make sure, you can get a complete list of
accredited stock holders by visiting the Philippine Stock Exchange (PSE) website at www.pse.com.ph. Some
of the requirements to opening an account are two valid IDs, specimen signature cards, and proof of billing.
You may also be asked to provide a cash deposit in order to begin investing.

Fourth step is to decide what stock to pick. If you do not want to bother studying particular stocks, an
alternative is to just buy into a mutual fund which is composed of a wide variety of stocks. To get information
about the stock market and specific stocks, one of the best sources, is again the PSE website. Check out too
the websites of the companies you are interested in and try to get a copy of their annual reports. Read books
and browse sites on stock market investing if you want to improve your stock picking skills.

Fifth step is placing an order. There are many ways of placing an order. You can order by phone or text to
your stock broker. It is even possible to buy stocks through the internet if you have an online broker. Once
your order is completed, your stock broker will give you a confirmation invoice indicating the details of the
transaction. Traditional brokers settle their transactions three days after the trade are done. And so you must
pay for it within three working days after the trade. However, online brokers, settle transactions on the day of
the trade.

Stock market investing is truly a fascinating subject and this article is just a brief overview of the topic. It
would be best if you first get to know more before risking your hard earned cash. BusinessCoach Inc.,
provides seminars on how to invest in the stock market.


Is the Philippine Stock Market Cheap or Expensive?

In the first few weeks of 2013, we have witnessed the record breaking performance of the Philippine Stock
Exchanges main index. Now everyone is wondering, what will happen next? Is it a good time to invest? A lot
of people are saying that it is no longer a good time to invest because stock prices have gone up and are
therefore expensive. However, if you base your investing decisions on the stock price alone, you will never go
forward. Imagine if the stock prices are high just like today, you will not invest because you think its
expensive. On the other hand if it is going down, wont you be scared to invest too? That is why looking at
the stock price alone will not tell you much. Sadly, a lot of people are speculating and talking about the things
that they know little of. They are saying that the stock market is expensive. Based on what? Is Company X
more expensive compared to its peers from the same industry? Or it is just expensive in general? There is a
growing sentiment that it is better to invest in other countries where stock markets are undervalued. I bet
the amount of money that you will use to invest in a foreign cheaper stock market will cost you more. In
order to invest in the stock market abroad, you need to open a local bank account, know their rules, their
government and economy. You also need to have a broker in that country. You might as well just invest in
your own country. Having said these things, how can we truly value the stocks in the Philippine Stock
Exchange nowadays? Are they really expensive? How can we make an intelligent choice? This is where
fundamental analysis comes into play. Fundamental Analysis is a method of valuing stocks by attempting to
discover a companys fair value. Through fundamental analysis, you try to discern what a companys intrinsic
or fair value is. It will help you determine which stock is more expensive than the others. This way, you can
base your decisions on thorough research and actual data rather than market tips, rumors, and innuendo. If
you compare the Price to Earnings (P/E) ratios of several of the biggest and best companies of our country
from 2011 up to today, you will see that they are actually dropping. What does this mean? It means that if we
look at how much we have to pay for one peso of earnings today, companies are actually cheaper compared
to the past few years. Yes, the actual stock price may be higher than before but since companies make more
money today than they did before, you dont have to pay as much to get those earnings. Factors such as a
better economy, recent mergers and acquisitions, new products, additional branches etc result in bigger and
more profitable companies. This in turn results to higher valuations and higher stock prices for the
businesses. Remember, next time someone tells you that the market is expensive, ask them Based on
what?

HOW TO INVEST IN THE PHILIPPINE STOCK MARKET
A Guide for Investors
Investors Primer III: Investing in the Philippines Stock Market

Table of Contents
1. What are stocks and equities?
2. What are stocks certificates?
3. What type of stock can you buy or sell?
4. What are warrants?
5. Where can you buy and sell stocks?
6. When can you buy or sell stocks?
7. Who can buy or sell stocks?
8. How can you buy or sell stocks?
9. What is the minimum amount you can invest in the Stock market?
10. What charges will you incur in buying and selling stocks?
11. What are your rights as a stockholder?
12. How can you make money in the stock market?
13. How do you collect information about stocks?
14. What do you need to do before you invest?
15. What are some investment tips which can help you while investing?
16. What are the risks involved in stock market investing?

1. What are stocks and equities?

A share of stock is evidence of a fractional ownership in a corporation. Buying a share of
common stock is in fact buying a share of a business. An individual who owns shares in, say,
Petron or PLDT has an ownership interest in that company and is called a stockholder or
shareholder. This ownership is also referred to as having equity in a company, hence, stocks
are also called equities or equity securities. The percentage or proportion of ownership depends
on how many of the companys share one owns.

For example, 1,000 shares of common stock in a corporation that has 100,000 outstanding
shares represent 1,000/100,000 ownership interest. This means you have one percent (1%)
ownership interest I the companys plant, its building, its inventories and other assets.

2. What are stock certificates?

Ownership of a business is represented by stock certificates. When an individual becomes a
stockholder of any corporation, he receives a stock certificate a written evidence of
ownership certified to the corporation. The certificate indicates the investors name, total
number of shares purchased, the certificate number, the par value and the name of the issuing
corporation.

When shares are purchased, the stock certificates will be issued either in street name or in
the investors name. The difference is important to know since without notice form the investors
all stock certificates will be issued in street name, i.e. in the name of the brokerage firm. In
this way, the brokerage firm and NOT the investor will be the holder of the stock
certificates. Only when the investor specifically asks for it will the stock certificates be issued
in the investors name.
Stock certificates that are in the street name facilitate the transactions by brokers. When the
investor decides to sell his shares, the street certificate simply be endorsed by the stockbroker.
If it were in the investors name, the process would be lengthier since it is the investor who
needs to endorse it at the back of the certificate. When shares are bought and sold frequently,
it is advisable to have them issued in street name since it will facilitate the quick transfer of
ownership.

3. What type of stocks can you buy or sell?

There are different types of stocks that you can buy or sell at the Philippine Stock Exchange
(PSE): common stock, preferred stock, cumulative preferred stock and convertible
preferred stock. The difference depends on the right and privileges which you receive as a
stockholder.

The majority of securities traded in the PSE are common stocks. Common stocks are usually
purchased for participation in the profits and control of ownership and the management of
the company they have voting rights. Common stock holders are entitled to an equal pro
rata division of profits without preference or advantage over another stockholder. However,
they have the last claim on dividends and are the last to collect in case of liquidation.
Common shares can be classified into class A and class B shares. Class A shares are reserved
to Filipino investors, while Class B shares are open to foreign investors as well as Filipinos.
Thus, Filipinos can own both classes while foreigners can only avail of Class B shares. Both
classes have the same privileges and rights, and receive the same amount of dividends.

Preferred stocks are another type of securities issued by corporations. Its name is derived
from the preference given to the holders of this stock over holders of common stocks.
Holders of the preferred stocks are entitled to receive a fixed minimum amount of dividends
(expressed either in pesos or as percentage of the stocks par value), to the extent declared by
the companys Board and if there are sufficient retained earnings, before any dividends are
paid to the holders of common stocks.

Cumulative preferred stocks are special preferred stocks that accumulate unpaid dividends
for future payment. Cumulative preferred stock has prior rights to dividends over common
stock; therefore the omitted cumulative preferred dividends must be paid before the common
stock dividends can be paid. Convertible preferred stocks are preferred stocks which are
exchangeable into common stocks at the option of the holder under specified terms and
conditions. The conversion ratio specifies the number of shares the holder receives upon
surrender while the conversion price is effective price paid for the common stock when
conversion occurs.


4. What are warrants?

Warrants are another type of investment which you can buy or sell in the stock market. By
definition, a warrant is a security which grants the holder the right but not the obligation to
buy (in the case of a call warrant) or sell (in the case of a put warrant), a stated number of
underlying shares of stock at a specified price during a specified period of time.

Underlying shares are the shares, unissued or issued as the case may be, of a corporation
which may subscribed to or purchased by the warrant holder upon the exercise of the right
granted under the warrants. The number of underlying shares a warrant holder is entitled
to buy or sell for every warrant he holds is known as the conversion ratio. The exercise
period specifies the life of a warrant while the expiration date is the date at which the warrant
expires. The exercise price is the stipulated stock price at which the holder can buy or sell
the underlying.

Warrants can be issued in a number of ways: (a) as part of an initial public offering; (b)
attached to a rights issue; (c) attached to bonds; or (d) as stand alone. In the case of debt or
equity offerings, warrants are used as sweeteners to enhance marketability of the issuances.
Under the SEC Rules Governing Warrants,Issuers or warrants may be the issuer of the
underlying shares or an entity other than the company underlying the warrants and may be in
the form of:

a) Subscription Warrant a warrant which grants the right to subscribe to the new or
unissued shares of stock of the Issuer;

b) Covered Warrant a warrant which is issued by a party other than the Issuer of the
underlying shares and whose performance of obligation is secured by the deposit of the
underlying shares for the Covered Warrant with an independent Trustee which is a
reputable commercial bank;

c) Non-collateralized Warrant a warrant issued by a party other than the Issuer of the
underlying shares and whose performance of obligation is not secured by a deposit of the
underlying shares. Instead, the Issuer normally adopts hedging strategies to provide for its
obligations during the life of the Non-collateralized Warrant.

Even if the trading of warrants is relatively new in the Philippine stock market, it has gained
some popularity. Currently, there are eight (8) warrants listed at the PSE. The warrant holder
has the chance to have the same exposure in the market, as with buying the stock itself, using
lesser amounts of money and the advantage of having more time, i.e. exercise period, in which
to raise money to purchase more shares (the underlying stock). Also, the investor is protected
from the downside risk of the underlying stocks price depreciation since the exposure of their
money is limited to only the price of the warrants.

5. Where can you buy or sell stocks?

The stock market is the place where shares of stock are traded while the stock exchange is
the organization that provides the facilities for the buying and selling of securities. The trading
floor is the place where member-brokers trade daily. 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.

Trading at the two trading floors or PSE is electronically linked by a computerized trading
system, the MakTrade System, which uses the single-order-book system where all the orders
are posted and matched in one computer. All trade orders entered by brokers in behalf of
their clients are matched with the best bid/best offer (BBO) regardless of which floor orders
originate.

6. When can you buy or sell stocks?

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.

7. Who can buy or sell stocks?

As the organization that facilitates stock trading, the PSE is not directly involved in the buying
and selling of securities. It is the Members (also known asmember-broker or member-firms) who can
buy or sell stocks for the investors since they are authorized and licensed by the Securities and
Exchange Commission (SEC) to transact business as a broker and/or dealer or securities.

A stockbroker acts as an agent or middleman between the investor and other buyers/sellers.
As an intermediary, the stockbroker executes orders for clients, purchasing or selling the
stocks on the stock exchange. On the other hand, a dealer acts as the principal rather than an
agent buying and selling for his/her own account.

An individual or corporation is considered a PSE Member once they have acquired a
membership seat and have met all the set requirements for membership. Each Member is
entitled to one seat which can be bought from an existing Member or from the Exchange.

8. How can you buy or sell stocks?
a) Choose a stockbroker. In choosing a broker, you must also see to it that the broker
(person or corporation) is a member of good standing at the Philippine Stock Exchange. A
complete listing of the PSE member-brokers can be found in various publications or from the
PSE Membership Department. It is important that you trust your broker and that you are
satisfied with the services it is giving you. Broker services include market reports, advice
regarding stock selection and timing of purchases and sales, trade executions, on time delivery
of important documents such as confirmation receipts and other trading-related activities
that the client may require.

b) Open a brokerage account. Once the investor has chosen his brokerage firm, a
brokerage account has to be opened. This account allows the client to perform stock
transactions (buy and sell shares) any time similar to bank account which enables you to
deposit, transfer and withdraw money.

Opening a brokerage account is relatively easy to accomplish and takes not longer than
opening a bank account. A specimen signature card needs to be filled out, containing
the: name, address (professional and private), telephone number(s), and most importantly, the clients
signature. Frequently, bank and professional references have to be submitted.

Once an account has been opened, the client may buy or sell immediately according to the
trading instructions between the investor and broker. Trading instruction can vary depending
on the investors objective whether it is short-term or long-term, minimum or maximum
value of trades (trading limit), etc. All transactions are handled confidentially and the broker
will not reveal to any person the details of any purchases or sales done for his client.

c) Place your order with your broker. After opening the account, a trader will be assigned
to the investor. A trader is a licensed salesman who is authorized to buy and sell securities at
the PSE. The assigned trader will be your contact person for all the transactions. He/she will
receive your order, most likely by telephone (unless arrangements are made), and will execute
the order through the trading terminal connected to the main system of the Exchange.

Thus, when placing an order to buy or sell, you have to call your trader and give the details of
your order. The trader need to know the following specifications: buy or sell order, which stock to
buy or sell, the number of shares to buy or sell, and preferably also the bid price (when buying) or asked price
(when selling).

d) Settle your transaction. Buying and selling transactions are settled by book-entry. This
means the ownership of shares and cash is transferred electronically to the brokerage account,
without the stock certificates and cash being handed over physically. The account is credited
when buying shares, and debited in the case of selling shares.

The paperless or scripless trading, now in place, has eliminated the physical handover of stock
certificates when buying or selling. The system replaced the scrip-based system where stock
certificates are handed over for transfer for the next owner, which may take more then 3 to 4
weeks. Instead, stock certificates are simply immobilized and kept in a safe place the
Philippine Central Depository, Inc. The book-entry system clearly advantages over the paper-
based system. It has dramatically reduced paper work, facilitated the trading and eliminated
the loss or forgery of shares.

Currently the PSE settles trades on T+4, i.e., four (4) days after the transaction date.
Therefore, payments and/or securities must be delivered to your broker on or before 1:00
p.m. of the fourth trading day following the sale. Be sure to always verify the settlement
deadline with your broker for future developments.


9. What is the minimum amount you can invest in the stock market?

The minimum amount of money needed to invest in the stock market depends on the
minimum amount of shares to be traded for the stock. This minimum amount will be
determined by the prevailing market price of a particular stock. For each stock the minimum
amount of shares to be traded is fixed and depends on the price range of the stock, as shown
in the table below (otherwise known as the Board Lot Table). To determine the minimum
amount of shares, the investor takes the market price of the wanted stock, looks for the price
range in the table below reads the minimum amount of shares in the same row.
Table 1
Board Lot Table

Minimum Amount of
Price ranges Shares

0.001 to 0.0024 1,000,000
0.0026 to 0.005 1,000,000
0.0055 to 0.01 1,000,000
0.011 to 0.025 100,000
0.026 to 0.05 100,000
0.0525 to 0.10 100,000
0.105 to 0.25 10,000
0.26 to 0.50 10,000
0.51 to 1.00 10,000
1.02 to 2.50 1,000
2.55 to 5.00 1,000
5.10 to 10.00 1,000
10.25 to 25.00 100
25.50 to 50.00 100
50.50 to 100.00 100
101.00 to 250.00 10
252.50 to 500.00 10
505.00 and upward 10

For example, an investor wishes to buy a stock whose market price is P100.00. This price is in
the P50.50 to P100.00 price range; consequently, the minimum number of shares to be
bought at a regular transaction is 100 shares. In this case, the minimum amount of the
investor needs is just about P10, 000.00 (100 shares x P100.00 share price) exclusive of other
charges for buying stocks.

For shares in the lowest range (from P0.001 to P0.0024) a minimum of P1, 000,000 shares
have be bought. If the share price is P0.001, the minimum capital outlay is P1, 000.00 (P0.001
x 1,000,000 shares).

10. What charges will you incur in buying and selling stocks?

Brokerage commission. When buying and selling listed securities, the brokerage firm
always acts as an agent between you, the buyers and sellers. His function is to execute the
clients order and to give advice when required. For the services rendered, the brokerage firm
charges its clients a commission. When you buy stock, the brokerage firm adds the
commission to the value of the shares bought. When you sell shares, the commission is
deducted from the proceeds that you receive. The maximum fee is 1.5% of the gross value of
the transaction (i.e., the number of shares multiplies by the price) plus 10% value added tax
(VAT). This means that 10% is added to the brokerage commission to be paid with a
maximum of 1.65% (1.5% + 10%).

Transfer fee. A transfer fee of P100.00 plus 10% VAT is charged to the buyer by the
transfer agent for every security traded. The transfer agent maintains the ledgers for each
issuer the company showing the details about each registered stockholder. It also has the
responsibility to cancel the old certificates and change the name when the shares have been
sold.

Cancellation fee. Sales transaction and/or direct transfers are subject to a cancellation
fee of P20.00 per bearer certificate plus 10% VAT.

Philippine Central Depository (PCD) fees. For the book-entry-settlement system,
buying and selling transactions are subject to an ad valorem rate of 0.00009174 (inclusive of
VAT), without any maximum or minimum amount, in lieu of transfer fee and cancellation fee.
If the client buys a PCD-eligible issue and still wants a stock certificate issued to his name, he
must pay the PCD ad valorem charge, a P25.00 upliftment/withdrawal fee per request and
transfer fee. Also, if a client sells a PCD-eligible issue and still has the stock certificate for
delivery to the broker, he is charged with the PCD ad valorem rate and a cancellation fee.

Documentary stamp tax. The documentary stamp tax is charged to the buyer on every
purchase transaction at the rate of P1.50 for every P200.00 par value of the stock being
transferred or a fraction thereof.

Stock transaction tax. The stock transaction tax is charged to the seller for
every sale of stocks listed and traded on the Exchange at the rate or of 1% of the value of
transaction, in lieu of the capital gains tax.

It should be noted that these tares are subject to changes. Please ask your brokerage firm for
the current tax rates and charges.

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) P10, 000.00
Add:
Brokers' commission (10,000.00 x 1.5%) 150.00
10% VAT on brokers' commission 15.00
Transfer fee 100.00
10% VAT on transfer fee 10.00
PCD fee (10,000.00 x 0.00009174) 0.92
Documentary stamp tax
[(2,000 shares x P1.00) x P1.50] 15.00
200
Total cost of the transaction P10, 290.92

This computation will be reflected on the Confirmation of Purchase which contains the
details of the buying transaction and which will be delivered by the broker to his client.

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

This computation will be reflected on the Confirmation of Sale which contains the details of
the selling transaction and which will be delivered by the broker to his client.


11. What are your rights as a stockholder?

As part owner of the corporation, stockholders are granted several rights.

Rights to receive dividends When dividends are declared by the companys Board of
Directors, shareholders are entitled to these dividends, but in proportion to the number of
shares held. However, shareholders cannot claim dividends when the company decides not to
declare any.

Voting rights The common stockholders have the right to vote and to decide
on a broad range of corporate issues, e.g. reorganizations, mergers, issuance of new stock and,
last but not the least, the election of the companys Board of Directors at the stockholders
meetings.

Pre-emptive right This is the right given to existing stockholders to purchase additional
shares before they are offered in the general public, usually at a lower price. For example, a
corporation decides to issue additional shares to the public and gives the right to all of its
stockholders to subscribe to the new shares at the ratio of 1:2. For every 2 shares owned,
present shareholders have the option to buy one additional share, if they so desire.

Limited liability and last claim to the companys assets liquidation If the
company in which you own stocks goes bankrupt your total loss as a stockholder is limited to
the amount that you paid for the security. You have the claim against the companys
remaining assets; however, your is the last behind all other creditors, such as suppliers,
employees and bondholders. The biggest risk you face is the loss of capital that you have
invested because the companys stock becomes worthless. Neither the corporation, the banks
from which it borrowed money, nor the bondholders to which it owes money have any claims
on your personal assets.

12. How can you make money in the stock market?

As owner of a corporations share of stock or stockholder, your return can come from either
dividends or capital gains.

Dividends are periodic payments made by the company to its shareholders from its current
and past profits. It is paid in either of two ways. The first and most common method is cash;
the second method is known as stock dividend.

Cash dividend This income is computed by multiplying the number of shares held by
the cash dividend rate declared. For example, if a company declares a P0.25 per share cash
dividend to tits shareholders, a stockholder with 10,000 shares of stock will receive a cash
dividend income of P2,500 (P0.25 x 10,000).

Stock dividend This dividend is given to shareholders in the form of additional stocks,
instead of cash. For example, a company with one million outstanding shares declares a
25% stock dividend. A stockholder who owns 10,000 shares will receive an additional
2,500 shares (355% of 10,000) for free as a stock dividend. This stockholder now owns
12,500 shares.

Dividend payments are not automatic. All dividends must be declared by the companys
Board of Directors, but it is the decision of the company whether to declare dividends or not,
the amount and when it will be paid. Usually, the higher the companys profit, the higher the
dividends paid to the stockholders. But if the Board decides not to declare a dividend, the
common stockholders receive nothing. Common stockholders cannot demand dividend
payments even if the company is profitable.

Capital gains This results form capital appreciation, or an increase in the
market value of the stock you own. For example, an investor buys 10,000 shares of stock at
P2.00 per share. After several weeks, the market price of the stock increases to P3.00. If the
investor decides to sell all his shares, he will be getting a total value of P30, 000 which
represents a 50% capital gain form his purchasing value of P20, 000. Thus, capital gains are
profit made due to an increase in the market price of a stock form the purchase price.

The combination of the dividend income and the capital appreciation made constitutes
the total return. The nominal rate of return is calculated by assign up the cash dividend income
and the capital gains (pr losses) and dividing the sum by the purchase price.

capital appreciation + dividend income
nominal rate of return = -------------------------------------------------------- (in %)
purchase price of the stocks

For example, a company declares a cash dividend of P5.00 annually. In the meantime, the
stock price reaches P30.00 form a purchase price of P20.00 a year ago. An individual who
owns shares of stocks of the company and sells his 100 shares after receiving the cash
dividend, has a total return of P1,500 (P5 x 100 +P10 x 100). The total rate of return would
be 75% or P1,500 divided by the purchase value of P2,000.


13. How do you collect information about stocks?

Having placed an initial amount in stocks, the next step is to keep track of the stock price and
to follow closely the developments of the company. It would not be wise to put your stock
certificates in a safe and have them locked away for years. There have been too many cases of
companies that performed badly for years, or even worse got bankrupt. It would be too bad
for an investor to discover after years that the shares have little or no value anymore.

A wise investor always keep track, on a regular basis, of the sock price and the companys
performance. This way, an investor is able to foresee possible consistent poor performance
and low profits as well as consequently low stock prices. One of the most important factors
influencing the amount of success achieved by an investor is the quality of information used
to make investment decisions.

Investors should therefore spend some time and effort in studying their investment and
keeping up-to-date with the developments in the company, the industry and the economy.

Stock market information For price and other stock market information, investors can
rely on the following sources: stockbrokers, Philippine Stock Exchange, media (newspapers,
television and radio), and information service companies (i.e., Bloomberg, Reuters,
Technistock, etc.)

Daily quotation of stock prices can be obtained from your stockbroker. Investors can call
their broker any time to inquire about the status of the stock market which includes stock
process, closing and opening prices, bid and asked prices, and traded volumes. Usually
brokers can also provide you with reports on the company and industry analyses which give
you an in-depth look into the performance of a particular corporation, industry or sector that
will lead to an advice to buy, hold or sell.

Stock price information can likewise be obtained from the Philippine Stock Exchange. It also
keeps a copy if all corporate statements that have to be disclosed to the public and the PSE as
part of its disclosure requirements. Annual, semi-annual and quarterly reports have to be
submitted to the PSE on a regular basis by every listed company. These reports and other
financial statements are kept in the PSE library and are available to the public.

In addition, the PSE Research and Public Information Department issues statistical Weekly
and Monthly reports and Fact Book in a regular basis. These contain among others, trading
statistics, the composite index and sectoral indices, market capitalization of listed companies,
volume and value traded. These publications are available at the PSE Library. The Library is
open daily form 8:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m., except Saturdays,
Sundays, and legal holidays. Also, these publications are on sale at he Public Information and
Assistance Center in Pasig City.

Most leading daily newspapers cover the stock market and publish the previous days closing
prices and traded volume.

For more in-depth news about the stock market, investors can turn to TV programs which
gives updates about the company, the various industries and particular companies while stock
price information is shown simultaneously. Stock market Live on Channel 21 (Sky cable)
covers the stock market every morning during trading hours.

Those who have a computer can access the World Wide Web for the latest stock market
information. Numerous brokerage houses provide closing prices as well as the composite
index and the indices of the different sectors. And give background information about the
stock market along with the market recommendations. You can visit the PSE
at http://www.pse.org.ph.

Information about a listed company Apart from keeping track of the stock prices and
other indicators, the investor should likewise monitor closely the companies he/she invested
in. The financial performance, dividend declarations, future outlook, the management of the
company, corporate developments, development plans in short, anything that could affect
stock process should be looked into. The following sources of information can be consulted
for company analysis:

Corporate annual reports. The annual reports of a corporation are
probably the best source for facts about a company. The most valuable information
contained in these reports are the financial statements, the company overview, the
achievements and developments, and future prospects.

Prospectus. When a corporation wants to issue new shares to the public, it must
prepare a complete report about he companys activities and development plans, called
a prospectus. Particularly, the prospectus must mention how the raised funds will be used
and attributed, This report is generally detailed and contains accurate information since it
has to be approved by the Securities and Exchange Commission before the company is
allowed to issue the shares.

A copy of the annual report and the prospectus can be obtained from the issuing corporation
or from the underwriter. Copies are also available at the PSE Library or form your broker.

Another source of information are company reports prepared by brokers research staff. Full-
service brokers regularly analyze listed companies and consolidate their findings in a report
which is usually available to their clients.

14. What do you need to do before you invest?

Before making any investment, you must first evaluate your current and potential means, and
determine the goal or purpose of making the investment. Every investor should ask himself
the following questions before making the first purchase:

How much money do I have to invest and can I afford to invest without adversely
affecting my life-style?What you want to invest may be quite different from what you have
to invest. It is true that the bigger your investment, the bigger the possible capital gains.
Consider an annual rate of return of 20%. If you had invested P100,000 you would have
gained a profit of P20,000. But an investment of P500,000 would have yielded P100,000.
Therefore, it might be tempting to put as much money as possible in the stock market to get
rich quickly. Butt investors should only invest extra money; they should not borrow to be able
to purchase more shares. Remember that stock investment carries a certain risk. Stock priced
can very substantially from day to day. Borrowing money acts as leverage: if stock prices are
increasing, the profits realized will be higher due to a bigger initial investment. But what if
stock prices are declining and you are incurring a capital loss? There might not be enough
money left to repay the borrowed money in the stock market money in excess of that
required for their living expenses, savings, the necessary insurance coverage and cash reserves
for emergencies. Determining your capital available for investing should be considered first.

What is the purpose of my investment? To generate cash immediately or to build
capital? For receiving dividends or for capital appreciation? For a childs education or your
retirement? For short-term benefits or long-term gains?

How much return would you accept as reasonable for your investment? Be realistic
about the returns the stock market can give you. Dont expect extraordinary returns.

How much risk am I willing to accept? Stated differently: How much money are
you able and willing to risk. Each individual should set a limit and be prepared to get out of
his stock when the limit is reached.

These are the questions you must answer before making any investment. Based on the
answers, a particular investment strategy has to be designed to achieve those goals. More
specifically, investments instruments have to be chosen stocks, debt securities and deposits
that will give you the expected return at the desired moment, and with their specific risk
characteristics.

These are the questions that your broker will ask in order to create your financial profile. It
becomes part of the information he or she considers when making investment
recommendations and selecting specific financial assets.

15. What are some investment tips which can help you while investing?

Investigate before investing. Investors should spend some time and particular stocks to
invest in. It is not advisable to put your money into any stock without first looking at the
corporation. Issues that have to be looked into are: market share and sectoral importance, the
financial performance of the company as shown in the annual and other financial reports, the
management, development plans, growth opportunities, etc. Please ask your broker for
assistance in selecting the stocks.

Diversify your portfolio. Diversification is the opposite of putting all your eggs in one
basket, a practice that is as risky as putting all your funds in one stock. Although temptation
of putting everything into one stock might be very great, especially when the price is moving
upward, it should be avoided. It is one of the basic rules in stock market investing.
Diversification, on the other hand, is the investment strategy of investing in different industry
sectors and if possible, different stocks from different reduce your risk considerably.

Dont rely on rumors. Frequently, rumors circulate in the stock market,
especially when there is heavy trading. At such times, people launch rumors as to where the
stock price will go, often to make money out of it. Rumors and hearsay should be carefully
checked and verified by the investor. Consider the source and the motive behind the
launching of the information and never act on the basis of a rumor that cannot be verified.

Monitor your investments. As discussed in number 13, having placed an initial amount
in stocks, an investor should now keep track of the stock price and the companys
performance on a regular basis. Only in this way you are able to foresee possible consistent
poor company performance which will be reflected in low stock prices. Investors should
therefore keep up-to-date with the developments in the company, the industry and the
economy.

Dont be greedy. The principle of making a profit in the stock market is simple: buy low
sell high or buy when the stock is inexpensive and wait till its price increases to sell. But
investors should not try to buy at the bottom or sell at the top. It is difficult to foresee when
the stock price has reached its bottom or top. Even trained experts with the best tools cannot
accomplish this feat frequently. Instead, investors should set objectives in terms of expected
return and profit and act accordingly. When the stock is still rising and the investor feels that
the price has reached the desired level yielding the expected profit, it is time to start selling.
He should not cling onto his shares for that extra bit of profit. For at the peak many investors
will get nervous and start selling, pulling down prices sharply and quickly. When this happens,
it may be difficult to sell, resulting in a lower-than-expected gain or profit. Greed in this case,
will cause much disappointment. Investors should therefore sell according to the previously
set profit objective and not wait for the very last moment. Simple: dont be greedy.

Limit your risk. Remember that stock investments are subject to risk. Very few people
like to sell at loss and, consequently, hold on their shares, even when the stock price keeps
falling. A better attitude would be to limit and manage your risk. A maximum level of loss
should be set (e.g. 20% stock price decrease) and get out of the stock when this level has been
reached. In that way, a further loss of capital is prevented, which can be used for other
investment opportunities.

16. What are the risks involved in stock market investing?

All financial assets carry some risk the risk that the actual return might be lower than
expected or promised. However, the risk characteristics are distinct depending on the type of
investment instrument.

Fixed-income securities, such as bonds, preferred stocks and convertible securities, generally
carry a low level of risk. The buyer of these assets know in advance how much interest
payment he will receive at the end of each month. This is true for treasury bills, savings, and
time deposits, and to lesser extent, also dollar deposits. The risk is related to the failure of the
financial institution bank, private company or government to pay the promised interest at
regular intervals. When a bank goes bankrupt, its assets might not be sufficient to pay all the
debts, including the interest to the account holders. They will receive less, or nothing at all.
Likewise, when the governments deficit becomes too large, it might not be able to pay the
holders of treasury bills the promised interest. Fortunately, private and government
organizations have generally proven to be able to hold their promises and repay the money
they borrowed.

The returns from stocks, however, are less predictable. Remember that stock provides
potential income in the form of cash dividends and capital gains when the stock price
appreciates. As outlined earlier, cash dividend payments are not fixed. It depends on the
Board of Directors of the company if dividends will be paid out, the amount of it and the
time. Therefore a stockholder is never sure of the cash dividend he will receive. This is the
first type of risk he encounters when buying stock.

Secondly, the capital gains an investor is entitled to depend on the price movement of the
stock. Since stock process can be very volatile, i.e. can vary substantially from one day to
another, the increase in the market value of the shares held varies too. As history has shown,
stock prices can speed up, but can also take a sharp dive. As stock prices go down, the capital
gains decrease, or even result in capital loss. Thus, this type of risk refers to the volatility of
the capital gains. Together, the variability of the cash dividends and of the capital gains
constitutes the total risk of stockholder.

To summarize, stocks are by far the most risky of financial instruments, but also the most
profitable. On the long term, they have proven to substantially outperform other financial
assets, and be the best hedge against inflation and loss of buying power. Fixed-income
securities generally provide less than half the return on stocks but exhibit substantially less
risk.

PSE Investing Procedures

1. Choose a stockbroker. The PSE has a complete list of information about all its trading participants who
are authorized and qualified to trade securities for you. This list is also available on the PSE's website and
the telephone directory's Government and Business listings yellow pages under the category of stock and
bond brokers. Aside from representing you in the stock market, a stockbroker can also offer you services
such as access to market reports/studies, on-time delivery of important documents, and advise on your
investments. It is then important that you trust your stockbroker and that you are satisfied with its
services.

2. You shall be required to open an account and fill out a Customer Account Information Form and to
submit identification papers for verification. The stockbroker will then assign a trader or agent to assist
you in either buying or selling any listed security. There are also stockbrokers who have an online trading
facility that allows you to post orders by yourself, but sufficient understanding of how the stock market
works is key. If you choose to be assisted by a trader or agent, you can discuss with him/her what stocks
you want to buy or sell.

3. Give the order to your trader, and then ask for the confirmation receipt. Your buy or sell orders are
relayed to the stockbroker's dealer for execution. In an automated system as in PSE, the order is keyed in
through a trading terminal and automatically matched. Confirmation of done trades - via phone, email or
online - is made as soon as possible and subsequently, an official confirmation or invoice should be
delivered to you.

4. Pay before settlement date. The delivery or payment should be made before the settlement date of T+3.
For traditional stockbrokers, settlement of transactions is usually done after three (3) working days from
the transaction date. This means that for transactions done on Monday, as an illustration, payment should
be received by Thursday. Meanwhile for online stockbrokers, settlement of all transactions is done on the
transaction date. Settlement of accounts is performed by the clearing house.

5. You shall receive from your broker either the proceeds of sale of your stocks (after 3 business days) or
proofs of ownership of stocks you bought (confirmation receipt and invoice). If you wish to have a
physical certificate of the stocks you bought, you can give instructions to your broker and pay the required
upliftment fee.

You can purchase shares of stocks either through an initial public offering (IPO) or through the open
market (also referred to as the secondary market). Shares sold through IPOs are offered for the first time
to the public by the company (primary market) whereby proceeds of the sale go directly to the company.
Shares of listed or publicly traded companies are only bought during trading hours. These shares have
since been transferred from one owner to another and proceeds of the sales do not go directly to the
company but to the owners of the shares.


The Trading Cycle





All equity transactions, whether buying or selling, have a settlement period of T+3 (trading day + 3 working
days). This means that a seller should be able to deliver the stock certificate, if any, to his broker and the
buyer must have paid the cost of transaction to his broker within 3 working days after the trade was done.
Historically, settlement was done manually (27-day cycle). With scripless trading, wherein settlement is done
via the book-entry-system (thru Philippine Central Depository or PCD), transactions are settled on the third
day after trade date. Under this system, the investor has the option to hold on to his certificate (uplift) or
deposit (lodge) this certificate in PCD through his broker-participant account.

Board Lot System

Equity trading is done by board lot or round lot system. The Board Lot Table determines the minimum
number of shares an investor can buy or sell at a specific price range. Therefore, the minimum amount of
initial investment varies and will depend on the market price of the stock as well as its corresponding board
lot. Prices of stocks move through a scale of minimum price fluctuations.


Table 1. Board Lot Table
Market Price (in Php) Tick Size Lot Size
0.0001 to 0.0099 0.0001 1,000,000
0.0100 to 0.0490 0.0010 100,000
0.0500 to 0.2490 0.0010 10,000
0.2500 to 0.4950 0.0050 10,000
0.5000 to 4.9900 0.0100 1,000
5.0000 to 9.9900 0.0100 100
10.0000 to 19.9800 0.0200 100
20.0000 to 49.9500 0.0500 100
50.0000 to 99.9500 0.0500 10
Market Price (in Php) Tick Size Lot Size
100.0000 to 199.9000 0.1000 10
200.0000 to 499.8000 0.2000 10
500.0000 to 999.5000 0.5000 10
1000.000 to 1999.000 1.0000 5
2000.000 to 4998.000 2.0000 5
5000.000 and UP 5.0000 5


Let's take a look at the illustration below.

Buying Transaction:
Mr. X wishes to buy a stock whose market price is P10.00. Based on the Board Lot Table, the number of
shares he can buy at a regular transaction should be in multiples of 100 shares. In this case, if Mr. X wants to
buy 1,000 shares (which is a multiple of 100 shares) his required cash outflow will be as follows:

Market price/share P 10.00
Number of shares to be bought x 1,000
P 10,000.00
Broker's Commission* (0.25% + 12% VAT) + 28.00
SEC Fee (Transaction Value x 0.005%) + 0.50
PSE Transaction Fee (Transaction Value x 0.005%) + 0.50
SCCP Fee (Transaction Value x 0.01%) + 1.00
Total Cash Outlay P 10,030.00


*Broker's commission varies depending on value of transaction, with a maximum allowable commission rate of 1.5% (please refer
to Table 2 below)
**If a buying client chooses to be issued and maintain a physical certificate in his/her name, an upliftment/withdrawal fee of
P50.00 per certificate issuance request and transfer fee of P100.00 + 12% VAT will be charged. In the illustration above, the
combined upliftment/withdrawal fee and transfer fee to be paid by the buying client will amount to P162.00 (P50.00 +
P112.00).

Selling Transaction:
Ms. Y wishes to sell a stock that is trading at P10.00. Based on the Board Lot Table, the number of shares she
can sell at a regular transaction should be in multiples of 100 shares. In this case, if Ms. Y wants to sell 1,000
shares (which is a multiple of 100 shares), her cash inflow will be as follows:

Market price/share P 10.00
Number of shares to be sold x 1,000
P 10,000.00
Broker's Commission* (0.25% + 12% VAT) - 28.00
Stock Transaction Tax** (Transaction Value x
0.5%)
- 50.00
SEC Fee (Transaction Value x 0.005%) - 0.50
PSE Transaction Fee (Transaction Value x 0.005%) - 0.50
SCCP Fee (Transaction Value x 0.01%) - 1.00
Net Cash Receivable P 9,920.00


*Broker's commission varies depending on value of transaction, with a maximum allowable commission rate of 1.5% (please refer
to Table 2 below)
**Stock Transaction Tax levied on sellers only
***If a selling client has certificates, he/she needs to have this converted into book-entry form in the PCD system. A cancellation
fee of P20.00 + 12% VAT and transfer fee of P100.00 + 12% VAT will be charged. In the illustration above, the combined
cancellation fee and transfer fee to be paid by the selling client will amount to P134.40 (P22.40 + P112.00).

TRADING/ TRANSACTION FEES AND TAXES

Brokerage Commission


A stockbroker is compensated for his services in executing orders on the Exchange through commission
charges, which are paid by both the buyer and seller to their respective brokers.
For trade transactions covering equity and equity-related products, the maximum commission rate is 1.5%
of the total transaction cost plus 12% value added tax (VAT). The minimum commission rates depend on
the amount of the transaction. (See Table 2)

Upliftment/Withdrawal Fee

If a buying client opts for a stock certificate to be issued in his name, he must make the request through
his broker who will then issue the upliftment request through the PDTC system. Upon receipt, PDTC will
then submit the request to the transfer agent for the issuance of the certificate. PDTC will charge the
broker an upliftment/withdrawal fee of Php50 per certificate issuance request. The transfer agent will
charge their usual issuance fee per certificate on top of PDTC's upliftment/withdrawal fee.



Cancellation Fee


If a selling client has physical certificates, he must have the certificates converted into book-entry form in
the PDTC system by requesting, through his broker, for a direct transfer (DT) with the transfer agent,
which costs Php100 (plus 12% VAT) per certificate for the transfer of ownership of shares to PDTC
Nominee Corporation (PCNC).
In addition to the DT fee, a client must pay cancellation fee of Php20 (plus 12% VAT) to the transfer
agent for cancellation of the certificates to be lodged in PDTC (for lodgment of shares). This is applicable
only to listed equities.

Stock Transaction Tax


Sales of equities listed and traded on the Exchange are subject to a stock transaction tax of of 1% (50
basis points) of the value of transaction charged to the seller, in lieu of the capital gains tax. The sale,
barter or exchange of shares of stock listed and traded at the PSE are exempt from documentary stamp
tax.

Withholding Tax

Under the National Internal Revenue Code of 1997, and except in cases where tax treaties are in force,
dividends received from domestic corporations are subject to a withholding tax of 10% if the recipient is a
citizen or resident alien, 20% if the recipient is a non-resident individual engaged in trade or business in
the Philippines, 25% if the recipient is a non-resident individual not engaged in trade or business in the
Philippines, and 30% if the recipient is a non-resident foreign corporation. Dividends received by
domestic and resident foreign corporations are not subject to tax. The rate of income tax withheld on
dividends paid to a non-resident foreign corporation may be reduced to 15% if the country in which the
non-resident foreign corporation is domiciled (a) imposes no taxes on foreign-source dividends or (b)
allows a credit against the tax due from the foreign non-resident corporation for taxes deemed to have
been paid in the Philippines equivalent to 15% of such dividends.



Table 2. Schedule of Transaction Fees and Taxes Levied on Investors
Type of Fee Rate
Brokerage Commission
(Min.)
1

Transaction Value Minimum Commission
Php100 million and below 0.25%
Above Php100 million up to
Php500 million
0.15% but not less than
Php250,000
Above Php500 million up to
Php1 billion
0.125% but not less than
Php750,000
Above Php1 billion up to Php5
billion
0.1% but not less than
Php1.25 million
Above Php5 billion up to Php10
billion
0.075% but not less than
Php5 million
Above Php10 billion 0.05% but not less than
Php7.5 million


Upliftment/ Withdrawal
Fee
Php50 per certificate
Cancellation Fee Php20 + 12% VAT
Stock Transaction tax 0.5% of the value of transaction
Withholding Tax
Filipino citizen or resident alien: 10% of dividends received
Non-resident individual engaged in trade or business in the
Philippines: 20% of dividends received

Type of Fee Rate
Non-resident individual not engaged in trade or business in the
Philippines: 25% of dividends received
Non-resident foreign corporation: 30% of dividends received



How to use the PSE Board Lot table

How much money do you need to start trading stocks in the Philippines? What is the minimum number of
PLDT, East West Bank or Megaworld shares that you can buy or sell? What is the next price increment for a
stock currently trading at P2,890?

Do you know that questions like these can be answered simply by looking at what is called the PSE Board
Lot Table?

What is the PSE Board Lot Table?

The Board Lot table of the Philippine Stock Exchange (PSE) is a guide for stock investors that shows the
minimum number of shares that can be bought or sold at any given time and the minimum price increments
of each PSE-traded stock.











PSE Board Lot Table


Stock Price
Minimum
Fluctuations
(Tick Size)
Board Lot (Lot
Size)
A 0.0001 - 0.0099 0.0001 1,000,000
B 0.0100 - 0.0490 0.0010 100,000
C 0.0500 - 0.2490 0.0010 10,000
D 0.2500 - 0.4950 0.0050 10,000
E 0.50 - 4.99 0.010 1,000
F 5.00 - 9.99 0.010 100
G 10.00 - 19.98 0.02 100
H 20.00 - 49.95 0.05 100
I 50.00 - 99.95 0.05 10
J 100.00 - 199.00 0.10 10
K 200.00 - 499.80 0.20 10
L 500.00 - 999.50 0.50 10
M 1,000 - 1,999 1.00 5
N 2,000 - 4,998 2.00 5
O 5,000 - up 5.00 5

This table governs Normal Lot trades in the PSE. The Normal Lot market is slightly different from the
Odd Lot market, which we will discuss in a separate article. Dont worry for now. If you are just trading
normally, you only need to understand the PSE Board Lot table.

Using the Board Lot Table

As mentioned earlier, the PSE Board Lot Table can be used to determine:

(a) the minimum number of shares that can be traded for each stock;
(b) the minimum price fluctuation or increment applicable to each stock; and
(c) the minimum amount of money needed to buy any PSE-traded stock.
Lets see some examples of the application of the Board Lot table.

Minimum Number of Shares that can be Traded

A. To know the minimum number of shares that can be bought or sold for each stock, follow these steps.

Step 1: Get the current price of the stock. Lets say you want to know the minimum number of shares of
PLDT (stock code: TEL) that you can buy or sell. Check the PSE website or your brokers website to get
TELs current price. Lets say you checked and saw that its currently being traded at P2,890.
Step 2: Check the row in the PSE Board Lot table corresponding to that stock price. TELs stock price of
P2,890 corresponds to Row N in the Board Lot table. This is because the price of P2,890 is within the
range P2,000 to P4,998.
Step 3: In that row, determine the Board Lot (Lot Size) for the stock. The lot size represents the minimum
number of shares that can be traded for any stock. In the case of PLDT, the lot size is 5 meaning, a
minimum of 5 shares of PLDT can be bought or sold at any time. Remember, this is minimum. Of course,
the trades can be higher than 5 shares and all posted trades may be processed as long as the number of PLDT
shares being traded is divisible by 5.
Easy, right? Lets move on to the next application of the Board Lot table.

Minimum Price Increment or Fluctuation

B. Lets say you want to sell your shares of East West Bank (stock code: EW). It currently trades at P29.60.
Can you sell it at P29.68? How about at P29.97? Can you sell it at P30.00?

Here are the steps needed to know the price increment or fluctuation for any give PSE-traded stock. As you
can see, this is useful if you want to input your own buying or selling price for a stock.

Step 1: Get the current price of the stock. Just like in Example A above, you can check the PSE website or
your brokers website to get the current price of your stock. In the case of EW, we have seen that its price is
P29.60.
Step 2: Check the row in the PSE Board Lot table corresponding to that stock price. If EWs stock price is
P29.60, what row in the Board Lot table corresponds to this price? If you answered Row H, you are
correct. The P29.60 price is within the price range in that row, which is P20.00 to P49.95, so we will use this
row in Step 3.
Step 3: Determine the Minimum Fluctuations (Tick Size) for that stock. The Tick Size column represents
the minimum price change or increment for any given stock. Given the price of EW, the relevant row is
Row H which shows that EWs tick size is PHP 0.05. This means prices to be used when trading EW must
be in increments of or divisible by 0.05.
So, can you sell EW at P29.68? Since its not divisible by 0.05, this cannot be possible. Can you sell EW at
P29.97? Again, since this is in increments of 0.05, this price will not be accepted.

Can you sell EW at P30.00? A big yes! Since this price is divisible by 0.05, EW can be sold at this price!
However, whether the sale will be a done trade will, of course, depend on the presence of buyers willing to
purchase EW shares at that price.

Minimum Amount of Investment Needed to Buy Stocks

C. Now, a very useful application of the Board Lot table is in determining the minimum amount of money
needed to start trading stocks. Actually in the PSE, there is no minimum fixed amount of money needed to
start trading stocks; it depends on the price of the stock and the minimum lot size.

Lets see an example below. Lets say we want to know how much we need to buy the minimum number of
shares of Megaworld Corp. (stock code: MEG).

Step 1: Get the current price of the stock. Again you can simply check the PSE website or your brokers
website to get the current price of your stock. In the case of MEG, lets say its current price is P3.35.
Step 2: Determine the lot size of that stock in the PSE Board Lot table. We need to know the minimum
amount of MEG shares that can be traded. To do this, refer back to the step-by-step process explained in
Example A above. Checking MEG in the Board Lot table, we see that its minimum lot size is 1,000 shares in
Row E.
Step 3: Multiply the current price with the minimum lot size. The product of the current price and a stocks
minimum lot size equals the minimum amount of money you need to buy that stock. In the case of MEG,
this is P3.35 x 1,000 shares = P3,350.
This means you need P3,350 to start buying MEG shares! Oops! Take note that brokers charge certain fees
and commissions so this amount will surely increase. Read our article on PSE Stock Trading Fees and
Charges to find out what these specific fees and charges are.

Also, be informed that some stock brokers require that you fund your trading account a minimum amount of
money before you can start trading. This amount is usually higher than the minimum amount of money you
need to buy a particular stock. Find out the minimum amount needed to fund your brokers trading account
in the article List of Online Stock Brokers in the PSE.

Now you know how to use the PSE Board Lot table. Again, be reminded that this table is only applicable to
trades using Normal Lots. In our next article, well see an example of trading in the alternative market, the
Odd Lot market.


Stock Brokers

AB CAPITAL SECURITIES, INC.
Broker ID: 112

Units 1401-1403, 14th Floor Tower One &
Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Metro Manila 1226
Telephone: (632) 898-7555
Email: customerservice@abcapital.com.ph
Website: www.abcapitalsecurities.com.ph
Minimum Investment: PHP 50,000
Brokers Commission: 0.25%
Account Funding: Through Metrobank
PMT Forum Discussion: Online Stockbrokers

ABACUS SECURITIES CORP.
Broker ID: 102

2904-A East Tower, PSE Center
Exchange Road, Ortigas,
Pasig City, Metro Manila 1600
Telephone: (632) 667-8931
Email: customerservice@abacus-sec.com
Website: www.abacusonline.com.ph
Minimum Investment: PHP 10,000
Brokers Commission: 0.25%
Account Funding: Through Metrobank, BDO,
RCBC
PMT Forum Discussion: Online Stockbrokers


ACCORD CAPITAL EQUITIES CORP.
Broker ID: 103

G/F Unit EC-05B East Tower
Philippine Stock Exchange Center
Exchange Road, Ortigas Center
Pasig City, Metro Manila 1605
Telephone: (632) 588-1900
Email: info@philstocks.ph
Website: www.philstocks.ph
Minimum Investment: PHP 5,000
Brokers Commission: 0.25%
Account Funding: Through BDO and BPI
PMT Forum Discussion: PhilStocks.ph

ANGPING & ASSOCIATES SECURITIES,
INC.
Broker ID: 110

20/F The Peak
107 L.P. Leviste St. Salcedo Village
Makati City Metro Manila 1225
Telephone: (632) 848-2915
Email: angping.online@angping.com.ph
Website: www.angpingonline.com
Minimum Investment: PHP 5,000 (for students);
PHP 15,000 (for professionals)
Brokers Commission: 0.25%
Account Funding: Through Metrobank
PMT Forum Discussion: Online Stockbrokers


BPI SECURITIES CORP.
Broker ID: 126

8th Floor, BPI Bldg.
Ayala Avenue cor. Paseo de Roxas
Makati City, Philippines 1226
Telephone: (632) 89-100
Email: bpitrade@bpi.com.ph
Website: www.bpitrade.com
Minimum Investment: No minimum, but account
must be funded to trade
Brokers Commission: 0.25%
Account Funding: Through BPI
PMT Forum Discussion: BPI Trade

COL FINANCIAL GROUP INC.
Broker ID: 203

2401B East Tower, Philippine Stock Exchange
Centre
Exchange Rd. Ortigas Center
Pasig City, Philippines 1605
Telephone: (632) 651-5888
Email: helpdesk@colfinancial.com
Website: www.colfinancial.com
Minimum Investment: PHP 5,000 (COL Starter);
PHP 25,000 (COL Plus); PHP 1 million (COL
Premium)
Brokers Commission: 0.25%
Account Funding: Through BPI, BDO,
Metrobank
PMT Forum Discussion: CitisecOnline



F. YAP SECURITIES, INC.
Broker ID: 162

17/F Lepanto Bldg.
8747 Paseo de Roxas
Makati City 1226 Philippines
Telephone: (632) 840-8331 / 923-3955 to 56
Email: info@2tradeasia.com
Website: www.2tradeasia.com
Minimum Investment: PHP 25,000
Brokers Commission: 0.25%
Account Funding: Through RCBC and BDO
PMT Forum Discussion: Online Stockbrokers

FIRST METRO SECURITIES
BROKERAGE CORP.
Broker ID: 267

18/F PSBank Center
777 Paseo de Roxas cor. Sedeno St.,
Makati City 1226 Philippines
Telephone: (632) 859-0600 to 02
Email: icustomerservice@firstmetrosec.com.ph
Website: www.firstmetrosec.com.ph
Minimum Investment: PHP 25,000
Brokers Commission: 0.25%
Account Funding: Through Metrobank
PMT Forum Discussion: First Metro Securities





RCBC SECURITIES, INC.
Broker ID: 217

RCBC Securities, Inc.
7/F Yuchengco Tower, RCBC Plaza
6819 Ayala Ave., Makati City, Philippines 0727
Telephone: (632) 889-6931 to 32; 34 to 36
Email: isaloricajr@rcbc.com
Website: http://www.rcbcsec.com
Minimum Investment: PHP 10,000
Brokers Commission: 0.25%
Account Funding: Through RCBC
PMT Forum Discussion: RCBC EZ Trade




WEALTH SECURITIES, INC.
Broker ID: 269

2103-A East Tower, PSE Center
Exchange Road, Ortigas Center
Pasig City 1600 Philippines
Telephone: (632) 634-5038
Email: office@wealthsec.com
Website: http://www.wealthsec.com
Minimum Investment: PHP 10,000
Brokers Commission: 0.25%
Account Funding: Through UnionBank, BDO,
BPI, EastWest Bank, RCBC, Metrobank
PMT Forum Discussion: Wealth Securities