Vivian Yuchengco warns the SEC's P120-million capital plan could force smaller Filipino stockbrokers out of business.
The SEC says tougher capital rules would protect investors, but Yuchengco argues that higher capitalization cannot prevent misconduct.
Yuchengco cited the 2024 Equitiworld failure to question whether higher capital could prevent wrongdoing, after regulators found discrepancies involving millions of pesos in client shares.
Philippine Association of Securities Brokers and Dealers Inc. (PASBDI) chair Vivian Yuchengco warned that the Securities and Exchange Commission's (SEC) plan to raise brokers' minimum capital to P120 million from as low as P30 million under existing rules could force smaller firms to shut down.
‘You're killing them’
“Please don't raise the capitalization of the Filipino brokers because we need them,” Yuchengco said on the sidelines of GCash’s trading debut on Tuesday, recalling a conversation she just had with SEC chair Francis Ed. Lim.
“We’re okay with P100 million paid up that's being done but do not increase to P120 million you're killing them they won't survive and we need them,” added the influential stockbroker and longtime director of the Philippine Stock Exchange.
Yuchengco said her firm, The First Resources Management and Securities Corp., already meets the capital requirement, but her concern is for smaller brokers and domestic clients.
"I said: I'm not fighting for myself, I'm fighting for the other Filipino [brokers] who don't have the money to go up in capitalization. And we need them for this business. They're the ones who support us when the business is not good. It's the Filipinos, not the foreign brokers," she explained.
In a separate interview during the same event, Lim said the proposal is up for public comments and the SEC would consider inputs from stakeholders.
“We’ve exposed the draft for [public comments],” Lim said on Tuesday.
Capital versus investor protection
The SEC argues that higher capital requirements would better protect investors, while some market players believe the industry would be stronger with fewer, better-funded brokers.
In an earlier interview, Lim said cases of misconduct were more common among less-capitalized brokers, but Yuchengco argued that wrongdoing was a question of integrity, not financial strength.
“They’re like that because they’re crooks. It has nothing to do with capital,” she said on Tuesday.
Equitiworld collapse
One high-profile case was the 2024 failure of stockbroker Equitiworld, which prompted regulators to step in amid concerns over missing client shares.
Yuchengco said shares belonging to the Meralco retirement fund had allegedly been sold without authorization after being entrusted to the brokerage.
“That hurts me because it was Meralco retirement fund. You don’t do that. It was deposited with them and they sold all the shares,” she added.
Millions in missing shares
Regulators uncovered Equitiworld discrepancies involving 154.9 million client shares worth P46.1 million, along with conflicting cash records, raising questions about the brokerage’s ability to meet its obligations.
The SEC ordered the Capital Markets Integrity Corporation to take over Equitiworld in November 2024 after finding that the firm could no longer meet clients’ demands for their shares or proceeds from stock sales.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
