The Securities and Exchange Commission (SEC) has released the regulatory framework governing market making activities, bringing Philippine market practices in line with international standards to improve liquidity, strengthen price formation, and support capital raising in the country’s financial markets.
Market making is a widely used mechanism where authorized participants continuously post both buy and sell prices for securities, helping ensure steady trading flows and keeping markets fair and orderly. The new rules set clear eligibility standards, disclosure duties, recordkeeping and reporting requirements, incentives, and safeguards to protect investors and uphold market integrity. They apply to market making in listed and traded equity and fixed income securities on exchanges under SEC jurisdiction, but do not cover government securities managed under the Bureau of the Treasury’s Primary Dealer system unless the SEC, working with the BTr, decides to expand coverage at a later date.
SEC Chairman Francis E. Lim described the framework as a key milestone in developing the Philippine capital market. “We expect this framework to help reduce frictions in secondary-market trading, support more efficient price discovery, and foster a more competitive trading environment for both domestic and international investors,” Lim said.
Under the new guidelines, only trading participants accredited by the relevant exchange and with at least ₱150 million in unimpaired paid-up capital — or such higher amount as the SEC may set — may serve as market makers. Candidates must also show they have the operational capability and a good compliance record. Accreditation will be handled by exchanges, under SEC oversight, with no separate SEC approval needed. Each firm must assign at least one qualified specialist with a minimum of three years of relevant trading or market making experience, or equivalent professional credentials.
For equities, market makers will be required to maintain firm, executable two-way quotes during minimum timeframes set by the exchange, except during system failures, broad market disruptions, force majeure, or other exceptional situations recognized by exchange rules. For fixed income securities, exchanges will tailor quoting standards based on the type of instrument, market structure, liquidity, and prevailing conditions, and will specify whether quotes are firm, indicative, or given on a best-efforts basis.
Existing market making participants will have six months from the circular’s effectivity to meet the new standards. Exchanges, meanwhile, must submit their detailed implementing guidelines to the SEC for approval within 30 days from the rules taking effect.
