CHAPTER 16
2. Give and explain briefly the subject and nature of the basic regulation of the following.
BSP All depository institutions Examines the books of commercial banks sets
reserve requirements for all banks
FDIC Commercial banks, mutual Provides insurance up to P500,000 for each
saving banks, savings and loan depositor at a bank, examine the books of
associations insured banks and imposes restrictions on
assets
SEC Organized exchanges and Requires disclosure of information, restrict
financial markets insider trading
IC Insurance companies, brokers Charter and examine the books insurance
companies, impose restrictions on assets they
can hold, and impose restrictions on branching
(Page 249, Table 1)
8. Give and explain the functions of the BSP as the country’s control monetary authority.
Liquidity Management – to establish and required to implement monetary policy that aims to keep prices stable
while retaining liquidity.
Currency Issue – Only BSP is authorized to make transactions, and as it is supported by the government, it is
accepted as legal currency for all debts.
Lender of Last Resort – In the interest of maintaining liquidity or when they lack enough liquidity to pay short-
term debt, they give financial institutions discounts, loans, and advances.
Financial Supervision – Serves as the regulator of all banks and has limited regulatory authority over non-banks
that perform functions similar to those of banks.
Management of foreign Currency Reserves - Keeps the stability of the Philippine Peso against such currencies
by holding a enough amount of foreign currency reserves to fulfill demand for them in the near future.
Determination of Exchange Rate Policy – They establish the stance of all Filipino banks with relation to these
issues and maintain a stable market. (Page 253-254, Par 5-9; Par 1-2)
14. Explain briefly the function of PDIC, namely
i. Deposit Insurance – It offers each depositor up to P500,000 in maximum deposit insurance, and in the
case of bank collapse, the PDIC promptly pays the valid deposit account and insurance.
ii. Risk Mitigation – As part of their examination and investigation to ascertain the bank's financial stability
and conformity with the established norms, they also provide regulations to be implemented in its charter.
iii. Receivership and Liquidation – They are the ones who are in charge of overseeing the liquidation or
winding up of the affairs of closed banks under their care and distributing the proceeds to their creditors
and uninsured depositors. (Page 251, Par. 1-6)
FLORES, KRISTINE HANNA U.
CBEA-01-401A
MGT7B
16. Are all deposit accounts covered by PDIC Deposit Insurance?
According to PDIC, the following accounts or transactions are not covered by deposit insurance under Charter:
1. non-deposit investment products like bonds and securities, as well as other similar instruments;
2. unfunded, fictitious or fraudulent deposit accounts or transactions
3. deposits that are found to be the results of illegal activity.
CHAPTER 17
2. Explain the basic mandate of the SEC.
Its fundamental responsibility is to oversee the business sector, participants in the capital markets, the securities
and investment market, investor protection, and all of these things together. In essence, they must manage to
preserve the financial market's integrity and stability while also sustaining sustainable economic growth. (Page
276, Par 1)
4. Give three examples of securities that are exempt from SEC registration.
• Any government-issued securities from nations with whom the Philippines maintains diplomatic connections.
• Certificates from a bankruptcy trustee or receiver that have been authorized by an adjudicating body.
• Any security or derivative whose regulation by law is vested in a different body, such as the insurance
commission, etc. (Page 278-279, Par. 11-12; Par. 1-2)
5. Give five examples of security sales transactions that are exempt from SEC registration.
• Any judicial sale or sale in bankruptcy
• A security offered in good faith as collateral for such a loan
• Individual sales of securities that take place in isolation
• The transfer of securities to investors as a dividend
• The sale of a corporation's capital stock to its own investors alone (Page 279, Par. 4-8)
7. What is the basic mandate of the Insurance Commission?
To oversee and control the pre-need, insurance, and HMO businesses in compliance with the rules established by
relevant organizations (Page 284, Par. 1)
8. Into what major departments are the functions and responsibilities of the insurance commission
deputized?
The Finance, Examination, Technical Service, Legal Services, and Management Support Business duties and
responsibilities of the Insurance Commission, as well as those delegated to the Office of the Deputy Insurance
Commissioner. (Page 286)
FLORES, KRISTINE HANNA U.
CBEA-01- 401A
MGT7B
