SEC proposed rules to simplify onboarding of low-risk accounts

THE Securities and Exchange Commission (SEC) is seeking to simplify the onboarding of accounts to financial intermediaries if they have a deposit not more than P50,000.

The corporate regulator posted draft rules on its website that will allow investors with low-risk accounts to “invest in excess of the prescribed limit” as set by financial intermediaries.

Financial intermediaries are SEC-regulated individuals such as broker dealers in securities, government securities eligible dealers, investment houses, investment company advisors and mutual fund distributors.

The SEC said it used to allow financial intermediaries to prescribe the threshold amount for low-risk accounts and propose additional criteria.

On the proposed rules, lowrisk accounts will be classified as those held by individual investors with initial and subsequent deposit or investment amounting to an aggregate of at most P50,000.

The SEC said with this, an investor may “[exercise] his right as a holder of securities, the non-exercise of which shall result in the dilution or diminution of his holdings.”

To open a low-risk account, an investor may simply provide his/ her complete name, birthdate, e-mail address, residential address, contact number, source of income, identification card with photo and signature card.

The SEC said this simplified procedure is aimed to improve financial inclusion in the Philippines. Only individual Filipino investors may be allowed to open low-risk accounts.

While the process of onboarding low-risk accounts is made easier, financial intermediaries are asked to systemically review these accounts to see if they need to be elevated to a normal or high-risk status.

When a low-risk account becomes normal or high-risk, the financial intermediary must conduct a customer due diligence, or the process to identify customers as part of a retention policy.

These proposed rules are currently up for public review. Comments may be submitted to the SEC until July 9. — Denise A. Valdez