The Securities and Exchange Commission (SEC) has imposed a 10-year cumulative term limit on broker directors of exchanges to strengthen market governance and reduce conflicts of interest.
The regulatory agency issued Memorandum Circular No. 17 on Thursday, capping the tenure of broker directors at a maximum cumulative period of 10 years at the same exchange, regardless of whether the service is consecutive or intermittent.
The new rules require broker directors who have served for 5 cumulative years to undergo a 1-year cooling-off period before they can seek reelection.
The policy aligns with governance principles set by the International Organization of Securities Commissions to promote fair representation in self-regulatory organizations.
“Strong institutions require regular renewal, independent oversight, and broader representation,” SEC chairperson Francis Lim said.
“By setting reasonable term limits for broker directors, the SEC seeks to strengthen market governance, mitigate potential conflicts of interest, level the playing field among the different categories of directors in exchanges, and align our regulatory framework with internationally recognized standards, while ensuring a fair and orderly transition,” Lim said.
Incumbent broker directors will receive a 2-year transition period to complete their current terms and stay eligible for election in the next 2 annual elections.
During this transition, the local equities exchange must execute a phased board reconstitution to improve representation, diversify expertise and strengthen minority shareholder protection.
The 15-member Philippine Stock Exchange (PSE) board includes a president-director, five broker-directors and nine non-broker directors.
Present PSE broker-directors include Diosdado Arroyo, Eddie Gobing, Anthony Te, Wilson Sy and Ma. Vivian Yuchengco.
