Philippine regulator targets stock brokers in next reform push

[MANILA] The Philippines’ corporate regulator is looking to increase the minimum capital requirement for stock brokers as it forges ahead with reforms despite pushback from some market participants.

The Securities and Exchange Commission (SEC) may increase the capital requirement for stock brokers to more than 100 million pesos (US$1.6 million), an amount set 25 years ago, chairman Francis Lim said in a briefing on Monday (Aug 24).

“We found out that those that misbehaved had small capital,” Lim noted. Many stock brokerages are still under-capitalised, with some as low as 30 million pesos, he added. 

“To be a broker is more than just buying and selling,” Lim pointed out, saying they must contribute in developing the stock market. “It requires capital to do investor education, to comply with regulatory requirements.”

The plan is part of the next wave of reforms by the SEC as it seeks to spur investor confidence and deepen the Philippine capital market, which Lim said has been overtaken by regional peers.

Lim, a former Philippine Stock Exchange president who President Ferdinand Marcos Jr  appointed last year to head the SEC, has moved to accelerate those reforms.

The SEC under Lim has introduced rule changes that paved the way for the upcoming initial public offerings of Mynt, the parent of top mobile wallet GCash, and PLDT’s data centre unit via a real estate investment trust.

Other reforms did not sit well with some market participants. SEC’s imposition of term limits on PSE broker directors has triggered a legal battle.

The SEC also filed a criminal complaint against Villar Land Holdings of billionaire Manuel Villar and its officers for alleged market manipulation, insider trading and misleading disclosures. Villar and his family denied any wrongdoing. 

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“I don’t want any entitlement in this capital market, everybody has to contribute,” Lim said.

SEC’s next priority will be on boosting the liquidity in the market, including reforms in market making, Lim shared. He declined to offer a timetable on the plan to raise stock brokers’ capital requirement. 

“We still have to study,” Lim noted. “When we do things, we do them carefully, so that if we’re sued, we have a defence.” BLOOMBERG