SEC pushes next wave of capital market reforms

The Securities and Exchange Commission (SEC) is preparing a new round of capital market reforms, following what it considers a successful first year under Chairperson Francis Lim. Lim highlighted the commission's focus on reducing regulatory costs and streamlining processes, acknowledging both the positive reception of its work and the resistance it faces. Lim described his first year as both "exciting and stressful," praising his commissioners for their crucial role in the commission's progress.

The commission is now shifting its attention to broader structural reforms, aiming to make it easier to start businesses, raise capital, and enhance liquidity in the Philippine market. Key measures include the proposed One Business Start Date, which would allow companies to commence operations once they secure their SEC registration or other primary regulatory licenses, while other government permits are processed concurrently.

The SEC also plans to establish separate regulatory frameworks for debt and equity offerings, as well as market-making rules for publicly listed securities.

Lim emphasized the commission's efforts to expand digital services and implement internal processing timelines, such as a "deemed approved" policy for applications that exceed prescribed periods. The SEC is collaborating with the World Bank to overhaul the public offering framework, aiming to make disclosure requirements more proportionate to the type and risk of securities offered.

This adjustment is intended to streamline capital raising for companies. Additionally, the SEC is working with the Philippine Stock Exchange and the Philippine Dealing and Exchange Corp. on a market-making framework for listed securities to boost trading activity and liquidity. The review of margin trading rules is also underway as a further means to improve market liquidity.

Further reforms include exploring potential revisions to the Personal Equity and Retirement Account framework to make it more appealing to both employers and employees, thereby encouraging broader participation in the capital market. Lim noted that a deeper capital market necessitates more issuers, diverse investment products, and Filipinos who understand how to save, invest, and engage in the market responsibly.

The SEC has proposed a Financial Literacy Bill to integrate financial literacy into secondary education curricula. Lim acknowledged that while significant progress has been made in reducing regulatory friction, structural barriers persist, hindering businesses from starting more swiftly and companies from accessing capital markets more efficiently.

His next priority is to address these obstacles and create a more accessible, liquid, and competitive market.