The Philippine Securities and Exchange Commission (SEC) is considering its most substantial capital requirement overhaul for stockbrokers in 25 years, aiming to raise the minimum capital to more than ₱100 million ($1.6 million). This move is part of SEC Chairman Francis Lim's broader reform agenda to boost investor confidence and deepen the Philippine capital market. Lim, appointed last year, noted that many misbehaving brokers had small capital, with some operating with as little as ₱30 million under existing rules, which he considers inadequate for a modern brokerage.
The proposed increase could force smaller brokers to either secure additional capital or merge with larger entities. While current rules allow some brokers to operate with ₱30 million if they are not engaged in market making, the SEC believes this level is insufficient to support investor education, regulatory compliance, and overall market development. Lim highlighted that some established brokers have already voluntarily increased their capital to between ₱300 million and ₱500 million, demonstrating their commitment to the industry.
The Philippine Stock Exchange (PSE) had previously proposed a phased increase to ₱100 million by late 2029, starting with ₱50 million by December 31, 2027, and requiring a ₱20 million surety bond for those not meeting the ₱100 million threshold by December 31, 2028. However, the SEC's current review suggests they might set an even higher bar, potentially exceeding the PSE's proposed ₱100 million, especially given that ₱100 million in 2001 would be equivalent to approximately ₱256 million today. Lim did not provide a specific timetable for the capital requirement increase, emphasizing a careful study process.
This reform is one of several initiatives by the SEC under Lim, which has already introduced rule changes to facilitate initial public offerings, such as Mynt (GCash parent) and PLDT’s data center unit. The SEC has also taken a strong stance against market manipulation, filing a criminal complaint against Villar Land Holdings. The next priority for the SEC will be to enhance market liquidity, including reforms in market making, as part of its goal to modernize the Philippine capital market, which Lim believes has lagged behind regional counterparts.
