SEC wants longer list of ‘buyers’ to improve capital market

The Securities and Exchange Commission (SEC) seeks to widen the investment opportunities available to sophisticated institutions, thereby deepening the capital market, by expanding the list of entities deemed as qualified buyers.

This is by proposing amendments to the 2015 Implementing Rules and Regulations of Republic Act No. 8799, or the Securities Regulation Code.

Qualified buyers are exempt from SEC registration requirement to purchase funds or securities locally or abroad. The assumption is they are familiar with a wide array of financial instruments, thus, the seller of unregistered securities or funds would not need to register with the SEC.

Under the SEC’s proposal, registered securities dealers, accounts managed by a registered broker under a discretionary arrangement and registered investment companies such as mutual fund companies can be considered as qualified buyers.

These are in addition to the current list, which includes banks, registered investment houses, insurance companies and pension funds or retirement plans maintained by the government.

The list of qualified buyers will also include provident funds or pension funds maintained by a government agency or by a government or private corporation and managed by an entity authorized by the Bangko Sentral ng Pilipinas (BSP) or SEC, as well as a trust corporation authorized by the BSP to perform the acts of a trustee, among others.

Qualified

Additionally, the following entities will be deemed qualified buyers: preneed company authorized by the Insurance

Commission; authorized collective investment scheme; any listed entity that engages the service of a professional fund manager; and a foreign entity that, if established or incorporated in the Philippines, would be covered by the enumeration.

By rule or order, the SEC may also determine as qualified buyers other persons on the basis of such factors as financial sophistication, net worth, knowledge and experience in financial and business matters, or amount of assets under management.

Furthermore, the proposed amendments would allow the SEC to expand the list of exempt securities through the issuance of an order, in addition to the implementation of a rule or regulation after public hearing.

The proposed amendments, issued last April 14, are on the SEC website. All interested parties may submit their feedback not later than April 20.