The Securities and Exchange Commission (SEC) has given the go-signal for the Diversified Financial Network Inc. com (DFNN), an Internet service provider (ISP) and a pioneer on local online stock trading, to proceed with its operations.
The SEC said that since DFNN merely provides the connection like the phone companies through which orders are delivered to the brokers, the corporate watchdog said there is no need for the company to secure a broker's license for business operations.
The SEC added that in the United States, Internet service providers are not regulated by their SEC, but by the Department of Commerce. Under Philippine laws, these agencies are under the supervision of the National Telecommunications Commission.
The DFNN earlier sought the opinion of the SEC on whether the services it peddles requires a broker's license.
DFNN provides a way by which orders are coursed from clients to their brokers, just like the services of telecommunication companies like the Philippine Long Distance Telephone Co., Bayantel and Globe Telecom where clients place a trade with their brokers by making a phone call. With DFNN, customers place a trade with the broker by entering their orders through the Internet over a secured connection.
In other words, DFNN does not accept the order for posting of execution. It merely delivers the order electronically from the client to the broker.
The broker's automated backroom system would then verify if the client's cash or security positions is enough to cover for the buy or sell order.
DFNN earlier announced plans to undertake an initial public offering (IPO), the proceeds of which will be used to expand its existing operations.
DFNN expects to raise from P133 million to P267 million from the IPO. It will offer 13.334 million new common shares with a par value of P1 per share at the offer price range of P10 to P20 per share.
DFNN said that after the IPO, DFNN.com will have a total of 53.344 million common and outstanding shares issued.
DFNN was created by former stockbroker Ramon C. Garcia Jr. and has tapped AB Capital and Investment Corporation as the issue manager, and Orion Squire Capital Inc. as lead underwriter along with AB Capital.
From the proceeds of the IPO, DFNN will allocate P70 to P187 million for the establishment of DFNN.com kiosks, P29 million for investments in joint ventures and about P20 million to P23 million for advertising expenses.