The Securities and Exchange Commission (SEC) is drafting rules to scrap the P20 minimum commission charged by stockbrokers to boost the capital markets and attract more investors.
Under the current rules, stockbrokers can charge a commission of 1.5 percent of the transaction value, but the amount should be no less than P20. The new guidelines would remove the minimum and allow brokers to set their own commission rates.
The SEC said that many stockbrokers had adopted the use of online trading platforms in executing trades, which resulted in a more cost-efficient execution of trading transactions.
“In view of these recent developments in the utilization of technology by brokers, there is a need to reflect the resulting cost-efficiency by way of reducing or eliminating the minimum commission charged by brokers and allow brokers to set their own commission schedule without constraints of a prescribed minimum commission,” the SEC said.
It said the elimination of the minimum commission charged by brokers to customers could lure more investors to participate in the market. It will also encourage investors to engage the services of a broker based on cost preference.
The SEC said the elimination of the commission is consistent with the agency’s thrust to boost the capital markets.
Under the Philippine Competition Act, financial regulators including the SEC has the power to determine the reasonable interest and fees being charged by financial service providers for any service or product offered to the market.
The draft guidelines are subject for public comment.