THE Securities and Exchange Commission (SEC) proposed rules for the qualification and eligibility of personal equity and retirement account (PERA) investment products.

In an advisory dated May 17, the commission listed examples of eligible PERA investment products, which can be a newly formed mutual fund, including any sub-fund of an umbrella fund and exchange traded funds.

Government securities, securities issued by the Bangko Sentral ng Pilipinas (BSP), and corporate bonds issued by banks in compliance with requirements of the BSP are exempt securities and are also considered as eligible PERA investments products.

The SEC may qualify other securities to be eligible as PERA investment products provided that the product is demonstrated to be non-speculative, readily marketable, and with a track record of regular income payment to investors.

Meanwhile, a security loses its eligibility as a PERA investment product when it is declared as ineligible by the SEC.

A registered equity security may lose its eligibility under the following circumstances: the registration statement pertinent to the security is suspended or revoked; in the case of corporate bond, it is declared to be in default by a competent authority or person in accordance with the applicable laws; in the case of corporate bond, its credit rating is downgraded to a non-investible grade; and in the case of the Philippine Stock Exchange Composite Index (PSEi) member security, it is removed from the PSEi.

On the other hand, a corporate bond issued by banks will lose its eligibility in case it is declared to be in default by a competent authority or person in accordance with the applicable laws, among other qualifications.

As for penalties, the SEC will impose any of the sanctions available if it finds that there is a violation of these rules as well as laws, rules, regulations and other issuances.

The commission said that the circular is to take effect 15 calendar days after its publication in the Official Gazette or in two newspapers of general circulation. — Luisa Maria Jacinta C. Jocson