The Securities and Exchange Commission is pursuing three major reforms designed to help the Philippine financial market catch up with those of other Southeast Asian countries.
Kelvin Lester Lee, the supervising commissioner of the SEC’s Markets and Securities Regulation Department (MSRD) and the Information & Communications Technology Department (ICTD), said these reforms include “Project 300”, the approval of short selling and stricter monitoring and regulation of unregistered stock market trading and cryptocurrency trading by foreign platforms.
Lee said several unregistered cryptocurrency and online trading platforms would soon be subject of advisories by the SEC with the aim of banning them from operating in the Philippines. He said such steps are necessary to protect investors and the public-at-large.
“First and foremost, the SEC has to protect the credibility of our markets—and this can only happen if it is assiduous in efforts to secure investors against potential and actual harm. Part of these efforts is to be strict in the agency’s regulatory function: we only allow entities, whether local or foreign, to operate in the Philippines once they are registered with the SEC or other Philippine regulators. Allowing unregistered entities to operate only increases investors’ exposure to risk; and normal, everyday business already has risks. Let’s not add to that,” said Lee.
The SEC also embarked on “Project 300”—a campaign to increase the number of publicly listed companies (PLCs) in the country to 300 by 2025. “Our initial goal is the listing of 15 initial public offerings near-term. This year, three companies have already expressed interest in filing IPOs with the support and encouragement of the SEC,” said Lee.
This project is aligned with the 888@88 initiative the SEC announced in 2021, where the commission aims to have at least 888 companies that would have tapped the capital markets for their capital raising activities. These include crowdfunding participants, hospitals and PDEX registered companies that raised capital through the capital markets.
Lee said the SEC took steps to make it easier for companies to hold IPOs. The regulator commited that IPO registration would be completed within 45 days, with the required financial information submitted by IPO applicants reduced from four years to just three years.
The SEC also allowed short-selling in the Philippine Stock Exchange after a wait of nearly three decades. Lee said the milestone was achieved after years of collaboration by both the SEC and the PSE. Short selling is expected to help boost trading activity in the Philippine equities market.
The SEC earlier issued several documents that would allow short-selling. Lee said that since June 2018, the commission en banc approved the Philippine Stock Exchange guidelines on short selling transactions which applies to all PSE index (PSEi) member companies and exchange traded fund (ETF) companies.
It also approved in December 2019 the Capital Markets Integrity Corporation’s (CMIC) implementing guidelines on SBLs and short selling to address concerns over the effect of SBL and short selling transactions on trading participants’ books and records, error transactions and the possible impact on trading participants risk-based capital adequacy (RBCA) ratio.
The SEC en banc in December 2022 approved the request of the PSE to allow offshore collaterals in SLB, subject to the condition that it be confined to participants that are qualified buyers.
It approved in July this year the application of the Philippine Depository & Trust Corp. (PDTC) Lending Agency Service (LAS) for equity securities under the PSE’s SBL program.
Lee underscored the importance of continuing the reform-oriented mindset at the SEC in the years to come.
“It is my hope that in the current administration and the administrations to come, the reforms we initiated at the SEC will be followed through, and given the chance to achieve their goals. The SEC has been quite active and effective these past few years in fulfilling its mandate to the Filipino people, especially in ensuring that our markets and securities ecosystem continues boosting business and trade. The momentum is already there, and it would be a win-win for all stakeholders if these reforms are maintained until their fruition,” said Lee, who was appointed to the SEC in January 2019.
Lee won multiple international awards for his efforts including the Digital CEO Award from Spark CIO Academy Asia in November 2023; Most Outstanding Contribution to Digital Innovation at the AI and Blockchain Conference in July 2023; and Outstanding Fintech Innovation Leader in the Philippines at the Asian Digital Finance Forum & Awards in March 2023.
