FIVE business groups on Thursday expressed support for a Securities and Exchange Commission (SEC) draft circular proposing term limits for broker directors of securities and stock exchanges like the Philippine Stock Exchange.
“We respectfully submit that the introduction of reasonable tenure limits for broker directors would represent a constructive step toward reinforcing independence, reducing potential conflicts of interest and enhancing the credibility of our securities exchange system,” said a collective statement from the Management Association of the Philippines, Institute of Corporate Directors, Financial Executives Institute of the Philippines, Capital Markets Development Foundation and Investment House Association of the Philippines.
Last week, the SEC solicited comments to the draft memorandum that would impose term limits on broker-directors serving on the boards of stock exchanges.
Under the draft rules, broker-directors or board members who represent brokerage firms and trading participants of an exchange may serve one-year terms or a maximum cumulative period of 10 years, whether consecutive or intermittent.
It also provides guidance on how service will be computed, and sets penalties on stock exchanges that allow broker-directors to exceed the prescribed limits.
The business groups pointed out that such term limits are already imposed on global financial markets, where entrenched interests are viewed as a barrier to modernization and transparency.
They likewise noted that securities exchanges function more than a standard private corporation.
“Under the Securities Regulation Code, they function as self-regulatory organizations with responsibilities that include monitoring trading, supervising brokers, enforcing rules and preventing market manipulation,” the groups said.
While the Revised Corporation Code sets general rules for corporate governance, it does not restrict regulators from imposing stricter standards on entities with public responsibilities.
“Financial institutions and listed companies already comply with enhanced governance requirements. Securities exchanges, given their regulatory role, must likewise adhere to safeguards that ensure independence and accountability,” the groups said.
