SEC Philippines Removes Minimum Stockbroker Commission to Boost Capital Market Activity

​The Securities and Exchange Commission (SEC) has removed the minimum amount of commission that stockbrokers may charge their customers, as it seeks to spur activity in the Philippine Stock Exchange (PSE). 

The Commission on April 16 issued SEC Memorandum Circular No. 7, Series of 2024, providing for the Removal of the Minimum Commission charged by PSE Stockbrokers.

The new rule allows brokers to set their own commission schedule for transactions with their customers, without the limitations of a prescribed regulatory minimum commission.

A 1977 resolution by the SEC previously set the broker’s commission at 1.5%. Meanwhile, guidelines issued by the PSE prescribed a minimum commission ranging from 0.25% to 0.05% of the value of a trade transaction.

The removal of the minimum commission takes into account the rise of online trading platforms, which have paved to way to more cost-efficient transactions. It also takes cues from other neighboring jurisdictions which do not prescribe a minimum stockbroker’s commission.

The SEC is banking on the removal of the minimum commission to help spur trading in the stock market, in line with other recent reforms implemented to boost the capital market.

The new rule likewise seeks to empower the investing public to engage the services of a broker of their choice based on cost preference.

“Lower transaction costs are vital in encouraging the public to invest their money in the stock market. The removal of the minimum stockbroker’s commission seeks to address this, and hopefully bring out more retail investors and spur trading activity,” SEC Chairperson Emilio B. Aquino said.

“The SEC will continue to review existing rules and regulations to see areas where we can make improvements to achieve our goal of boosting the capital market,” he added.

In 2023, the SEC approved the shorter settlement cycle of T+2 from T+3, thereby allowing investors to receive proceeds from securities trades within two days instead of three. This also effectively reduced risk exposure for trading participants by one day.

The SEC has likewise launched simplified application procedures for agribusinesses, in line with President Ferdinand R. Marcos, Jr.’s focus on agriculture.

Last year also saw the approval of the PSE’s application for exemptive relief in relation to its merger with the Philippine Dealing System Holdings Corporation, which is expected to create synergies and efficiencies in favor of capital market participants.

Most recently, the SEC signed a partnership agreement with the University of the Philippines Law Center to foster capital market development through capacity building and policy research analysis.