These are deep-pocketed brokers who will be required to constantly offer to both buy and sell shares, ensuring that everyday investors can always find a trade when they need one.
Under this sweeping new framework, the regulator is restricting this powerful role to well-funded brokerage firms holding at least P150 million in pure capital.
Rewarding the Risk Takers
The new rules also cover the bond market, where local exchanges will set specific trading guidelines based on how easily different assets can be bought and sold.
Existing brokers are given a strict six-month window to comply with the new requirements, while local exchanges must submit their enforcement rules for final SEC approval within 30 days.
Because these brokers are taking on financial risk by constantly holding shares, the SEC is allowing exchanges to reward them with major perks like reduced transaction fees and cash rebates.
Forcing Market Action
To qualify for the program, participating firms must deploy specialized traders with at least three years of proven experience to actively manage these trading lines.
In the stock market, these designated brokers are now strictly required to keep their buy and sell offers open and ready for action during a set portion of the trading day.
“Establishing a robust market making framework is an important milestone in our efforts to boost trading activity in the Philippine capital market,” said SEC chair Francis Ed. Lim.
Finance Secretary Frederick D. Go said the directive is a critical reform to finally bring the country’s lagging trading environment up to global standards.
“A deeper and more liquid capital market gives investors greater confidence to participate, enables businesses to raise more capital, and channels private investment into productive sectors,” Go said.
—Edited by Miguel R. Camus
