Incidentally, the SEC had issued a Cease and Desist Order (CDO) against a Philippine company, citing certain provisions of the Securities Regulation Code (RA 8799). According to the SEC, the company's business operations are "possible violations" of the law and that it is "engaged in the trading of foreign currency futures contracts in behalf of its clients without the necessary license". The BSP, acting on a letter-request from SEC, replied that the company's business activity "does not fall under the category of futures trading" and "can not be classified as financial derivatives transactions":

As indicated in your description of the transactions and the documents submitted, the foreign currency leverage trading, subject of your query, is essentially similar in mechanics to currency future trading, particularly with respect to the margin requirements, standard contract size, and daily market-to-market of open position.  However, it does not fall under the category of futures trading because it is not exchange-traded.  Further, we can not classify it as being financial derivatives transactions as we consider the transaction as plain currency margin trading, which by its mechanics, involve the set-up of margin and non-delivery of the currencies involved.

In view of the foregoing facts, the activities of the aforesaid corporation are not covered by BSP guidelines on derivative licensing.

The Supreme Court ruled that the SEC acted with grave abuse of discretion in issuing the CDO and in making it permanent. The SEC failed to comply with the two essential requirements that must be complied before it may issue a CDO: First, it did not conduct proper investigation or verification; and, Second, there is no finding that the act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public. (Source: SEC vs. Performance Foreign Exchange Corporation, G.R. No. 154131, 20 July 2006)