THE Securities and Exchange Commission (SEC) on Thursday imposed a 10-year cumulative term limit for broker directors of bourses, pushing through with planned governance changes that have been questioned by Philippine Stock Exchange (PSE) veterans.
“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,” SEC Chairman Francis Lim said.
Memorandum Circular 17, Series of 2026 maintained the 10-year cap proposed in March but shortened the cooling-off period between cumulative five-year terms to one from two. Incumbent broker-directors who would have been forced to cut their terms short under the draft rules have now been given a two-year reprieve.
Those affected will be allowed to complete their terms and run in the next two annual elections, although the regulator warned that transition period could be shortened “for good cause and/or under specific conditions.”
During the two-year transition, the PSE will also have to reconstitute its board by including “two foreign independent directors with international market expertise, broker directors representing foreign brokerage firms and directors with investment banking or capital markets experience, taking into account the importance of good governance and minority shareholder protection.”
The term limits will affect long-serving PSE broker-directors such as Ma. Vivian Yuchengco, Eddie Gobing and Wilson Sy. The Philippine Association of Securities Brokers & Dealers Inc., which Yuchengco chairs, has said that the move would undermine shareholder rights and make the Philippines an outlier among Asean exchanges.
The SEC said the measure was consistent with principles of the International Organization of Securities Commissions, which emphasize fair representation in the governance of self-regulatory organizations such as exchanges.
It warned that violations of the term-limit rules carry a penalty of P1 million per broker director per year plus a monthly P30,000 fine if the director remains in office. Repeated violations could lead to suspension or revocation of an exchange’s license.
The memorandum will take effect 15 days after publication in the Official Gazette or in at least two newspapers of general circulation.
