The Securities and Exchange Commission (SEC) has formally introduced structured warrants, launching a new set of rules that expands the range of products available to investors nationwide.
Under a new memorandum circular, the SEC established the regulatory framework governing these instruments—financial products issued by third-party financial institutions that give holders the right, but not the obligation, to buy or sell a specific underlying asset, or receive cash based on its value, at a set price and on or before an agreed expiry date.
SEC Chairman Francis E. Lim said the move as a key step forward. “This marks a major milestone in deepening and modernizing our capital market. Structured warrants will serve as a powerful tool for risk management, hedging, and portfolio diversification, bringing our market architecture in line with our peers across ASEAN,” he stated.
Only licensed broker-dealers, investment houses incorporated in the Philippines, or foreign firms duly authorized to operate locally may serve as issuers. Both the issuer and its guarantor must maintain unimpaired paid-up capital of at least ₱400 million throughout the lifespan of any outstanding warrants.
Eligible underlying assets cover listed local or foreign shares, market indices, exchange-traded funds, listed debt securities, and baskets of such instruments—all of which must meet minimum liquidity, market capitalization, and trading volume standards set by the relevant exchange.
For warrants tied to local shares and settled physically, the total size of any new issue combined with existing outstanding warrants may not exceed 50 percent of the issuing company’s issued capital, excluding treasury stock. Individual offerings must be at least ₱20 million.
All structured warrants must be registered with the SEC before sale, accompanied by a prospectus detailing full terms, risks, and conditions to help investors make informed choices. Contracts will generally have a maximum lifespan of three years, subject to SEC approval for extensions.
