SEC probes brokers over failed REIT trade

sec probes brokers over failed reit trade - SEC probes brokers over failed REIT trade

THE Securities and Exchange Commission (SEC) is investigating cases of failed trading of real estate investment trust (REIT) shares which started last week.

The corporate regulator over the weekend said it received complaints from investors who failed to trade shares for Ayala-led AREIT, Inc.’s securities due to their brokers’ alleged failure to secure permission to deal in the transaction.

Particularly, it pointed out COL Financial Group, Inc. for supposedly failing to secure necessary permits to deal in AREIT’s offering.

The SEC is also confirming reports about another broker whose clients experienced the same issue.

In a notice to clients, COL Financial said there had been a “misunderstanding” on the status of its requirements submitted to the Philippine Stock Exchange (PSE) to be permitted for trading AREIT’s securities on its platform. It has yet to receive the bourse’s review, certification and approval, it added.

“Unfortunately, this can take up to sometime next week at the earliest. This means that COL clients will still be unable to buy or sell AREIT shares through our platform in the following days,” it said.

Another brokerage, Abacus Securities Corp., which runs MyTrade Philippines, also explained to its clients that their share orders got rejected because of “miscoordination” between the company, its platform providers and regulators. The issue, though, has already been resolved, it claimed.

“As a gesture of commitment to you, we will honor the rejected orders at the price where it should have been done,” it said.

The trading mishap was a “black eye” for the country’s capital markets, Ismael G. Cruz, president of the Philippine Brokers & Dealers Association, told Finance Secretary Carlos G. Dominguez III. He relayed to the Finance chief a copy of the notices, which were shared with reporters.

“I have been in contact with the SEC and fully support their investigation on this issue,” Mr. Dominguez said.

The SEC said its Markets and Securities Regulation Department is on top of the issue.

“Rest assured that the Commission shall take appropriate actions toward the resolution of the matter at the soonest time possible in the interest of the investing public,” it said.

The SEC reminded trading participants to fulfill a list of requirements to become eligible REIT securities traders with the PSE, complying with its amended REIT Listing Rules.

It also noted the PSE’s Broker Eligibility Guidelines to Trading REIT Securities which states that investors must record their securities ownership under a Name-on-Central-Depository (NoCD) arrangement.

Moreover, registered salesmen are mandated to undergo training before they are permitted to deal in REITs.

On Thursday, AREIT, the country’s first REIT, debuted in the local bourse.

It offers a portfolio of three office buildings in Makati City: the 24-storey commercial building Solaris One, mixed-use development Ayala North Exchange and the five-storey commercial office McKinley Exchange. — Adam J. Ang

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