Have you ever went to sabong (cockfighting) where the kristos are shouting "Lo Diyes""Pay,pay,pay"Sa Wala""Sa Meron" and then after the fight, they began collecting the money from the loser and give it to the winner? The stock market a few decades ago, is a very animated place like sabong. Brokers are shouting with one another like "San Miguel sell for 50!""Buy Purefoods for 90!", etc. Some are even holding placards with their stocks. The stockbrokers are like kristos. Tell them that you need Metrobank stock and they will shout it for you in the market. Likewise, when you sell a stock, they will shout, and yell in the market in order to sell your stock. Then they collect the money from the buyer of stocks and gives the money to the seller of stocks. That was the old days!
Today, you can buy or sell a stock all on your own, albeit with the help of the computer. Gone are the days when stockbrokers are shouting. Now, everything can be done while you are on vacation, while working, eating at Jollibee, going to the metro, etc. as long as you bring with you an electronic gadget with an internet.Yesterday, I woke up at 6 am, took a cup of coffee and opened the Citiseconline website (Best Online Broker in 2007, given by the Agora Excellence Award; Outstanding Trading Participant for Active Investor Education, both given by the Philippine Stock Exchange, in its 1st PSE Awards Night.) . I just click the buy button, encoded a few details and my transaction went to the main server of Philippine Stock Exchange where the seller awaits. In just a few seconds, the stock I purchased was instantly credited in my account because there are sellers in the PSE servers waiting for their stocks to be matched. Since they want to sell 300 for 60/share and I want to buy 300 shares for 60/share, the transaction was instantly consummated. This means that I now own shares of stock of the company I bought. But where is the certificate to prove that I own them?
Once the purchase I had made yesterday morning was consummated, it automatically went to the servers of PCD (an institution owned by PSE where all transactions are recorded.) to record my purchase of stocks as the rightful owner. PCD records the owners of the shares of stock. Since I own 300 shares of stock, I can demand the PCD via Citiseconline to issue stock certificates in my name but I did not do that. The reasons are: 1. If I will ask Citiseconline to open a subaccount in my name at the PCD records, I need to pay additional 100 pesos every month to PCD.
2. If I insisted for a stock certificate and then after a few months I wanted to sell it, I need to go to through PCD within settlement date otherwise I will pay penalties or cancellation fee if the stock certificates could not be delivered on time.
3. If I insisted for a stock certificate, PCD will remove my shares in their records system until I decided to sell them. I need to approach PCD again to reenter my shares in their records so that I can sell them again in the stock market.
4. If I insisted for a stock certificate, I need to pay 100 pesos to my stockbroker plus 20 pesos plus 12% VAT.
5. If I insisted for a stock certificate, I may need to go to my stockbroker personally to deliver the stock certificates when I am about to sell them which is not possible because I live abroad.
These are just five of the many cons of owning a stock certificate. Yes, I can request for a stock certificate from my stockbroker but the cost and processes I had to go through is not beneficial for me. Philippine Stock Exchange works electronically through heavy servers.
5. If I insisted for a stock certificate, I may need to go to my stockbroker personally to deliver the stock certificates when I am about to sell them which is not possible because I live abroad.
These are just five of the many cons of owning a stock certificate. Yes, I can request for a stock certificate from my stockbroker but the cost and processes I had to go through is not beneficial for me. Philippine Stock Exchange works electronically through heavy servers.
"The PSE through its central depository (PCD) uses the computerized book-entry system (BES) to transfer ownership of securities from one account to another, thus eliminating the need for physical exchange of scrip between buyer and seller. The trading system where settlement is carried out via book-entries, rather than by the movement of physical certificates. This system is called scripless trading. However, you may still request for an upliftment of your shareholdings to get a physical certificate".
Welcome to the world of electronic trading! "There are risks you cannot afford to take; but there are also risks that you cannot afford not to take."
Very helpful indeed
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