PSE Sees Fewer Brokers on SEC’s Capital Hike Plan​

The Philippine Securities and Exchange Commission (SEC) is looking to raise the minimum capital requirement for stockbrokers to more than 100 million pesos (US$1.6 million), a significant increase from the current 30 million pesos. This reform, announced by SEC chairman Francis Lim, aims to strengthen the financial standing of brokerage firms, as Lim noted that many misbehaving brokers had small capital. The SEC believes that requiring higher capital will enable brokers to invest in investor education and comply with regulatory requirements, thereby contributing to the development of the Philippine stock market, which Lim feels has been outpaced by regional peers.

This proposed capital increase is part of a broader set of reforms by the SEC to boost investor confidence and deepen the capital market. Lim, appointed by President Ferdinand Marcos Jr., has already initiated changes that led to upcoming IPOs for Mynt (GCash's parent) and PLDT's data center unit. The SEC is also focusing on improving market liquidity through reforms in market making, with a draft guideline proposing a 100 million pesos minimum capital for brokers acting as liquidity providers. While the SEC has not set a timetable for the capital requirement increase, it is conducting careful studies.

The Philippine Stock Exchange (PSE) has also proposed its own phased increase in capital requirements, aiming for all trading participants to have 100 million pesos in unimpaired paid-up capital by December 31, 2029. The PSE's plan involves an initial increase to 50 million pesos by December 31, 2027, and adjustments to surety bond coverage in 2028 for those not yet at the 100 million pesos threshold. The SEC's review is closely watched, as it could potentially set an even higher bar than the PSE's proposed 100 million pesos, with some established brokers already voluntarily maintaining 300 million to 500 million pesos in capital. The regulator acknowledges that this reform could lead to a shakeout in the industry, forcing smaller brokers to either raise fresh capital or consolidate.