MC No. 06 s.2017 - Guidelines on the Submission of the Annual Report on Segregation of Functions (Chinese Wall)

Securities and Exchange Commission PHIllPPINtS SEC M E M O R A N D U M CIRCULAR NO. 6 Series o f 2017 TO A L L BROKER DEALERS IN SECURITIES SUBJECT GUIDELINES ON THE SUBMISSION OF THE ANNUAL REPORT ON SEGREGATION O F FUNCTIONS (CHINESE WALLS) ******************************************* In order to effectively implement Rule 34.11 o f 2015 Implementing Rules and Regulations of the Securities Regulation Code (2015 SRC Rules) which requires Broker Dealers to submit an annual report on the measures it has taken to enforce Chinese W a l l Rules, the Commission in its meeting on March 9, 2017, resolved to issue the following guidelines: Section 1. Coverage of the Report. A l l policies, procedures, investigations, violations pertaining to Chinese Wall o f the preceding year shall be submitted to the Commission and SRO not later than the 15th day o f March o f the succeeding year. For this year the deadline o f submission shall be no later than March 3 1 , 2017. Section 2. Information required to be disclosed in the annual report on Chinese Wall. The annual report on Chinese Wall shall contain the following information: a. The different units in the company and the persons in charge in the flow o f information. b. Policies and procedures or system employed by the firm to prevent.improper or unintended dissemination of market sensitive information and misuse or inappropriate flow o f material, nonpublic information. c. Any investigation, violation or attempt to violate Chinese Wall policies and procedures, including the action taken by the firm. d. Dissemination o f the Chinese Wall policies and procedures to employees. e. A n y updates on the Chinese Wall policies and procedures. Section 3. Template of the report. Attached as Annex A (SEC Form 34.11 A R ) is the template for the annual report on Chinese Wall. Section 4. Signatory to the Annual Report on Chinese Wall. The Annual Report on Chinese Wall required to be submitted under Rule 34.11 o f the 2015 SRC Rules shall be signed by the Associated Person and duly noted by the President. Section 5. Undertaking to comply with the rules and regulations. The provision of SRC Rule 34.11.5 requiring Broker Dealers with other functions to submit an undertaking under oath to comply with the rules and regulations, orders, memorandum circulars Published: The Philippine Star, torch 2 2 , 2017 The Manila Times, March 22, 2017

and policies promulgated by the Commission, and o f other rules, procedures, standards and policies set by other Exchanges or SRO and duly approved by the Commission, and its own internal rules and procedures regarding Chinese Walls shall likewise be signed by the Associated Person and the President and submitted together with the Annual Report on Chinese Wall every 15th day of March. For this year the deadline o f submission shall be no later than March 3 1 , 2017. Section 6. Penalty. Non-compliance with any o f the provisions o f SRC Rule 34.11 shall be considered a violation subject to the administrative sanctions provided in Section 54 o f the Code. Section 7. Effectivity. This circular shall take effect immediately upon approval o f the Commission. Pasay City, Philippines, March 17, 2017. For the Commission: TERESITA J. HERBOSA Chairperson

'Annex A" Securities and Exchange Commission P HI1IP PI N[ S A N N U A L R E P O R T O N C H I N E S E W A L L R U L E S ( S R C Rule 34.11) For the Year Broker Dealer Name: 1. Check the applicable boxes: � Broker Deal with: � Proprietary Shares � Dealer � Equity Securities � Non-Proprietary Shares � Mutual Fund Distributor � Fixed Income/Debt Securities � Mutual Fund � Others � Government Securities Do you have any of the following: � Retail Sales � Research � Settlement � Others, � Accounting � Institutional Sales � Advisory 2. What are the distribution units in the flow o f information in the company? Indicate the persons in charge. 3. What are the procedures in handling the flow o f information between the different units in the company? 4. What are the policies in terms o f getting the advance information from the research unit vs. the dealer's unit? 5. What are the policies and procedures when employees o f another unit are "brought over the wall"? S E C Form 34.11 AR Page 1 of 2

Annex A" 6. What are the measures undertaken so that the information are not misuse? 7. Has there been any instance in the year covered that there was a violation/attempt to violate SRC Rule 34.11? Provide the details. 8. What has been done to enhance the Chinese Wall Policy o f the company? 9. H o w are policies and procedures relating to Chinese W a l l and the use o f material non-public information made aware to employees? Are trainings/updates to employees conducted? Give details. 10. Provide information on other policies/procedures relevant to Chinese Wall that were not mentioned above. Prepared by: Signature over printed name Date: Designation: Date: Approved by: Signature over printed name Page 2 of 2 Designation: S E C Form 34.11 A R