SEC moves to liberalize stockbrokers’ commissions
The Securities and Exchange Commission (SEC) is moving to liberalize retail stock market trading to prop up volume in the local bourse.
Toward this end, the SEC has issued a draft circular seeking to reduce the minimum commission charged by stockbrokers to zero from P20.
Stockbrokers have been benefiting from enhanced trading which has reduced transaction costs, the SEC said.
“Based on records, capital market professionals, such as brokers, have adopted the use of online trading platforms that enable them to execute their trades, thereby resulting in a more cost efficient execution of transactions,” SEC chairman Emilio Aquino said in the circular.
“In view of the recent developments in the utilization and application of technology by brokers, there is a need to reflect the resulting cost efficiency by way of reducing or eliminating the minimum commission charged by brokers and allow brokers to set their own commission schedule without the restraint of a prescribed regulatory minimum commission,” the regulator added.
The SEC said the reduction or elimination of the commission is deemed consistent with public interest and in boosting the volume of trades in the stock market as it encourages investors to actively participate in the market and allows them to engage the services of a broker of their choice based on cost preference. Thus, the SEC said, brokers can share the benefits with investors by reducing their commissions and this could result in higher market volumes.
The SEC has given stock market brokers until Jan. 26 to submit their comments on the plan.
The entry of Gcash and Maya as new platforms for stock market trading has also resulted in a more liberalized retail trading regime.
Last August, the PSE, in partnership with Globe Telecom’s GCash and AB Capital, launched GStocks, an initiative that aims to activate the untapped potential of the Philippine equities market using an in-app stock trading platform in GCash.
Maya likewise launched its Maya Stocks feature with Philstocks as the partner-broker. Maya is set to include 2TradeAsia, DragonFi, and Seedbox in the lineup, allowing users to choose their preferred broker.
The Philippine Stock Exchange Inc. (PSE), for its part, has also been pushing for initiatives that will lower transaction costs.
It is working with regulators and government entities to implement regulatory reforms aimed at fostering stock market investment.
It is pushing for the reduction of the stock transaction tax to 0.1 percent from 0.6 percent and the reduction of the dividend tax to non-resident aliens to 10 percent from 25 percent to harmonize the cash and property dividend rate.