THE Philippine Stock Exchange (PSE) is proposing to ease penalties for certain disclosure violations, particularly for small and medium enterprises (SMEs), in an effort to encourage more companies to go public.
PSE president and chief executive Ramon Monzon said during a recent forum that while investor protection is important, not all disclosure lapses significantly affect shareholders.
“We do have a responsibility to provide investment protection,” he said, adding that some violations, like those for share transfers, “really have no impact on investors.”
“I think we should lighten up on that,” Monzon said. “And perhaps for SMEs, if they have some disclosure violations, don’t penalize them on the first or second offense. Keep giving them chances.”
He added that a more forgiving regulatory environment could encourage smaller firms to consider listing on the exchange.
“And hopefully with that, if we are able to provide that assurance to small companies, their fear of being listed might diminish,” he said.
This move is supported by Securities and Exchange Commission Chairman Francis Lim, who called it a positive step toward improving market participation.
“That’s a good move,” Lim said. “I agree with it.”
Lim said that relaxing disclosure penalties would not weaken investor safeguards, as other countries have already adopted similar reforms. He also noted that improving the ease of doing business, streamlining listing processes, and promoting market integrity are crucial for attracting both local and foreign investors.
“We have to streamline our processes… make it easy,” he said. “We have to really go out of our way to tell the companies that there’s value in being listed in a stock exchange.”
While in favor of flexibility for SMEs, Lim clarified that serious violations, such as market manipulation, would remain unacceptable. He pointed to the controversial cases of Abra Mining, Calata Corp., and BW Resources as examples of “mortal sins.”
Both officials agreed that reforms targeting smaller firms could help the local market catch up with its regional peers and prevent capital from flowing into unregulated alternatives like cryptocurrency, which Lim warned are quickly overtaking traditional exchanges.
