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Wednesday, July 9, 2014

Rules and Guidelines Against Stock Price Manipulation a.k.a "Market Manipulation"

Below are the rules & guidelines of the Capital Markets Integrity Corporation (CMIC) against stock price manipulation.

We would like to remind The Filipino Investors out there to trade in accordance with the rules of proper trading and to not be a victim of these illegal trading practices - specially that stock price manipulation is easier to pull off on smaller markets with smaller companies such as the Philippines, that is not to say that this removes the merits of long-term investing in the stock market.

As an investor and trader in the Philippine stock market for about 4+ years now. It is good to know that these rules are properly in place.

Here are some of the listed violations as presented in Article XI-B, Section 9 of the CMIC Rules.

Section 9. Manipulative Schemes.

Set forth below are non-exclusive examples of types of prohibited

(a) Engaging in a series of transactions in securities that are reported publicly to give the
impression of activity or price movement in a security (e.g. painting the tape);

(b) Posting actual or fictitious bid or offer at or near the close of the market, whether
matched/executed or not, in an effort to alter or is likely to have the effect of altering
the closing price of the security (marking the close);

(c) Engaging in transactions where both the buy and sell orders are entered at substantially
the same time with the same price and quantity by different but colluding parties
(improper matched orders);

(d) Engaging in buying activity at increasingly higher prices and then selling securities in the
market at the higher prices (hype and dump);

(e) Engaging in transactions in which there is no genuine change in actual ownership of a
security (wash sales);

(f) Taking advantage of a shortage of securities in the market by controlling the demand
side and exploiting market congestion during such shortages in a way as to create
artificial prices (squeezing the float);

(g) Disseminating false or misleading market information through media, including the
internet, or any other means to move the price of a security in a direction that is
favorable to a position held or a transaction.

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