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Broker-dealers are buyers and sellers of securities, and they are also distributors of
other investment products.
They perform a dual role in carrying out their responsibilities.
They act on behalf of the brokerage firm, initiating transactions for the firms own
account.
They handle transactions, buying and selling securities on behalf of their clients.
In their dual roles, they perform a couple of vital functions; they facilitate the free
flow of securities on the open market
They buy or sell securities in their own accounts to ensure there is a market in
those securities for their clients.
Definition: Securities
Traditional
Online
Process: Opening an Account
When buying a particular stock, the person should risk his gauge
risk profile
The risk profile will be the basis of the decision on what to buy and
when to sell
Safe side blue chips lesser risks (part of our day to day life;
Meralco, San Miguel, PLDT) established and stable companies.
Movement of stocks close to 5-10%
Growth side higher risks but may possibly give bigger returns
Measure the risk by looking to the macro and micro levels
Company Indicators
Fundamentals
Earnings Growth
Dividends
Material Developments
Economic Indicators
GDP Growth
Interest
Inflation
Exchange Rate
Process: Knowing your Risk Profile
Risk does not always reside with the company; it may also reside
with the person investing. Risk tolerance does not match the stock
bought.
Long position goal when buying a stock. A person buys a stock,
wait for the price to increase, and then sell. Buy low, sell high
Short selling
Buying Selling
Investor Investor
Settlement PDTC
Banks (Depository)
SCCP
PDTC (Clearing Settlement
(Depository) House) Banks
Broker Broker
Selling
Buying
Investor
Investor
Brokerage Commission
Above Php100 million up to Php500 0.15% but not less than Php250,000
million
Above Php500 million up to Php1 0.125% but not less than Php750,000
billion
Above Php1 billion up to Php5 billion 0.1% but not less than Php1.25
million
Above Php5 billion up to Php10 0.075% but not less than Php5 million
billion
This also provides an avenue for individuals to participate in the growth of the
company and the economy as a whole
The governments advocacy is for people to become participative in the growth
of the economy. And to be able to participate, one must have a purchasing
power and an earning power.
In the stock market, a person may buy directly shares of stock of those publicly
listed companies, and in turn, one may turn an entrepreneur already because he
becomes part-owner of the company. And when the company grows, the
investment also grows.
More money flowing in the company, the better.
Current Issues