The Organisation for Economic Cooperation and Development (OECD) recommended shortening the approval process for initial public offerings (IPOs) and strictly enforcing existing corporate governance policies to bolster investor confidence in the Philippine capital market.
Commissioned by the Securities and Exchange Commission (SEC) in 2023, the OECD conducted a detailed assessment of the Philippine capital market and made key recommendations to improve the market framework for sustainable economic growth.
Among the main recommendations, the OECD emphasized strengthening the enforcement of current corporate governance policies to ensure transparency and accountability within companies.
It also advocated for a shorter approval process for IPOs, arguing that it would provide companies with more certainty and encourage them to go public.
The OECD highlighted the potential of around 400 private enterprises, including state-owned enterprises, to go public if the SEC and the Philippine Stock Exchange (PSE) work together to streamline the listing process.
Carmine Di Noia, OECD director for financial and enterprise affairs, expressed optimism about the Philippine economy’s momentum and the government’s willingness to address areas for improvement.
The OECD’s review involved gathering input from various market stakeholders, including government officials, industry groups, investors, and securities exchanges. The goal was to provide an objective and informed perspective on the Philippine capital market.
The OECD also cited the need to deepen the investor base by relaxing certain measures for institutional investors to increase their market participation.
SEC chairman Emilio Aquino welcomed the OECD’s findings, saying the report aligns with the SEC’s priorities to bring the Philippine capital market at par with Asian peers.
The OECD’s key recommendations include strengthening corporate governance enforcement, particularly through the publication of corporate governance reports to ensure transparency and accountability.
The SEC initiated several reforms to strengthen the capital market, including streamlining public offering requirements, reducing the settlement cycle for equity trades, and removing minimum commissions charged by stockbrokers.
It also simplified the registration of securities for power generation companies and real estate firms and encouraged small and medium-sized businesses to use crowdfunding as an alternative funding source.
Aquino expressed confidence that the OECD assessment validates the SEC’s direction and reaffirmed the agency’s commitment to continuing reforms and realizing its vision of a more robust and dynamic financial sector.
