The Philippine Securities and Exchange Commission (SEC) is moving to significantly increase the minimum capital requirement for stockbrokers, potentially raising it to over ₱100 million ($1.6 million) from the current ₱30 million for some firms. SEC Chairman Francis Lim stated that this reform aims to enhance investor confidence and deepen the Philippine capital market, which he believes has lagged behind regional peers. Lim noted that many undercapitalized brokerages, some with as little as ₱30 million, have been involved in misconduct, and that a higher capital base is crucial for investor education and regulatory compliance.
This proposed capital overhaul, the largest in 25 years, is expected to lead to consolidation within the industry as smaller brokers may struggle to meet the new requirements, forcing them to raise fresh capital or merge. While existing rules generally require ₱100 million, some brokers not involved in market making can operate with a minimum of ₱30 million. Lim acknowledged that even ₱100 million might not be sufficient given inflation, as ₱100 million in 2001 would be equivalent to about ₱256 million today, hinting that the new floor could exceed ₱100 million. Currently, 121 active trading participants operate on the Philippine Stock Exchange, and Lim indicated that fewer than half have capital below ₱100 million.
The Philippine Stock Exchange (PSE) had previously proposed its own phased increase in minimum capital to ₱100 million by December 31, 2029, with an interim target of ₱50 million by December 31, 2027. However, the SEC's current review suggests it might set an even higher bar than the PSE's proposal. Some established brokers have voluntarily maintained significantly higher capital, ranging from ₱300 million to ₱500 million, which Lim praised as a sign of their commitment to the brokerage business. The SEC's reforms under Lim have already included paving the way for IPOs of Mynt and PLDT's data center unit, addressing market manipulation, and imposing term limits on PSE broker directors, with future priorities including boosting market liquidity.
