Insider Spotlight
The support comes after renewed scrutiny of the Philippine Stock Exchange’s (PSE) board composition, where the continued presence of long-serving broker directors has raised concerns about independence and potential conflicts of interest in its role as a self-regulatory organization, as previously reported by InsiderPH.
The position was outlined in a joint statement issued March 19 by the Institute of Corporate Directors, Financial Executives Institute of the Philippines, Management Association of the Philippines, Capital Markets Development Foundation, Inc., and the Investment House Association of the Philippines.
The groups said the proposal would “represent a constructive step toward reinforcing independence, reducing potential conflicts of interest, and enhancing the credibility of our securities exchange system.”
Why it matters
Securities exchanges are not ordinary corporations. As self-regulatory organizations under the Securities Regulation Code, they oversee trading, supervise brokers, enforce rules, and prevent market manipulation—making governance a matter of public interest.
The big picture
The groups emphasized that the SEC has broad authority to regulate exchanges, including their governance frameworks. Within this mandate, they said introducing term limits is a “prudent and well-calibrated exercise of oversight” that directly addresses risks of undue influence, regulatory capture, and conflicts of interest.
They added that while the Revised Corporation Code sets general governance rules, regulators can impose stricter standards on entities with public responsibilities, including exchanges.
Between the lines
Term limits are designed to prevent concentration of influence among long-serving broker directors while ensuring continued board renewal.
The groups said such limits “do not diminish shareholder choice—they activate it,” ensuring stockholders periodically select from other qualified brokers who can bring fresh perspectives and accountability to the board.
They outlined four objectives
Zoom out
Global financial markets widely adopt tenure limits and independence requirements for exchange boards to guard against entrenched interests and reinforce credibility.
The groups said these measures balance fair representation of exchange members with the broader public interest.
Bottom line
Business groups see the SEC’s proposed circular as a measured reform that strengthens accountability, promotes independence, and reinforces investor confidence in the Philippine capital markets. — Princess Daisy C. Ominga | Ed: Corrie S. Narisma
