Leading Philippine business groups have thrown their weight behind the Securities and Exchange Commission (SEC) proposal to impose term limits on broker directors of securities exchanges, calling it a timely governance reform aimed at bolstering investor confidence and market integrity.
In a joint statement issued Thursday, March 19, the organizations described the draft memorandum circular as a “constructive step” toward strengthening board independence, curbing conflicts of interest, and enhancing the credibility of the country’s securities exchange system.
Signatories include the Institute of Corporate Directors, Financial Executives Institute of the Philippines, Management Association of the Philippines, Capital Markets Development Foundation Inc., and the Investment House Association of the Philippines.
“Term limits do not diminish shareholder choice—they activate it,” the groups said, arguing that periodic board refreshes ensure stockholders regularly select from a wider pool of qualified brokers, injecting fresh perspectives and reinforcing accountability.
The coalition outlined four key benefits include preventing the concentration of influence among long-serving directors; reducing the risk of regulatory capture through board renewal; boosting investor confidence via stronger independent oversight; and expanding opportunities for other brokers to participate in exchange governance.
They added that tenure limits and independence rules are widely adopted in global financial markets to guard against entrenched interests. While the Securities Regulation Code requires fair representation of exchange members, the groups said this must be balanced against the broader public interest.
Securities exchanges, they emphasized, are not typical corporations but self-regulatory organizations responsible for overseeing trading, supervising brokers, and enforcing market rules—making governance reforms critical to maintaining trust.
The SEC, they said, is well within its mandate to introduce such safeguards, with the proposal aligned with international best practices and supportive of a more resilient Philippine capital market.
The endorsement from influential business groups gives the SEC proposal early momentum—and political cover—as it pushes reforms that could face resistance from entrenched market players. Term limits, while seemingly procedural, strike at the core issue of board entrenchment in self-regulated exchanges, where long-tenured broker-directors can blur the line between oversight and industry interest.
If adopted, the measure could mark a shift toward more independent governance in Philippine capital markets. Its effectiveness, however, will hinge on enforcement and whether new entrants truly diversify board perspectives rather than recycle the same networks.
