Pursuant to its authority under the Securities Regulation Code (“SRC”), the Securities and Exchange Commission (“SEC”) issued on 27 October 2006 Memorandum Circular No. 14, otherwise known as the Rules Governing the Over-The-Counter (“OTC”) Market (the “Rules”), to ensure that the Philippine OTC Market shall operate in a manner that is consistent with investor protection, market integrity and transparency and in order to promote the development of the capital market.

The Rules govern the operation and use of an OTC Market by registered persons such as brokers, dealers, salesmen or associated persons of broker or dealer, who trade or deal in securities in the secondary market.

The requirements under the Rules shall be in addition to those provided under: (1) the SRC and other related laws and their implementing rules and regulations (“IRR”) insofar as their provisions are applicable; (2) internal policies, procedures, conventions of brokers or dealers; and (3) rules, procedures and conventions of the Self-Regulatory Organization (“SRO”) that shall regulate and supervise the brokers, dealers, salesmen or associated persons of broker or dealer who participate in the OTC market, to the extent that such policies, rules, procedures and conventions do not contravene the SRC, its IRR and these rules.

The Rules provide for the following: (a) Making, Creating or Operating An OTC Market; (b) Registration of Broker, Dealer, Salesman and Associated Person of Broker or Dealer In An OTC Market; (c) Registration of A Group of Persons to Operate An OTC Market; (d) Membership In An SRO; (e) Eligible Investors In An OTC Market; (f) Eligible Securities In An OTC Market; (g) Quotation and Quotation System; (h) Submission of Information Relative to the Quotation System; (i) Operation of A Quotation System By A Dealer; (j) Operation of a Quotation System By A Broker; (k) Operation of A Quotation System By A Group of Brokers and/or Dealers; (l) Integration of the Quotation Systems; (m) Required Information Before Initiation or Resumption of Quotations; (n) Trade Reporting Obligations; (o) Approval of A Central Trade Reporting System; (p) Capital Adequacy Requirements and Reports; (q) Commissions, Charges and Fees; (r) Clearing and Settlement; (s) Other Applicable Rules In The SRC-IRR; (t) Unlawful Acts; (u) Other Prohibited Acts; (v) Penalties; and (w) Transitory Provisions, among others.