UMVA has learned that the Securities and Exchange Commission has imposed a sweeping new rule that caps broker directors on exchange boards at a cumulative ten‑year tenure.
This bold move is designed to shake up entrenched leadership, ushering in fresh talent with diverse expertise and widening market representation. Analysts say the limit will curb the grip of long‑standing directors and spark a wave of renewal across the nation’s trading venues.
According to information obtained by UMVA, a broker director may now serve no more than ten years in total on the same exchange, whether those years are consecutive or broken up. After five years of service, the director must sit out a full year before becoming eligible for re‑election.
The rule counts any year in which a director serves more than six months as a whole year, and it allows a re‑elected director, after the cooling‑off period, to start a fresh five‑year stint. A two‑year transition window gives current incumbents time to finish their existing terms before the new limits kick in.
Veteran board members who have long shaped the Philippine Stock Exchange will feel the impact. Figures with decades of service, such as a 28‑year veteran and others with 25 and 12 years behind them, will be required to step aside under the new regime.
Industry voices see a silver lining. One managing director described the ten‑year ceiling as a balance between preserving institutional memory and opening doors for newcomers who bring different backgrounds and perspectives.
During the transition, exchanges are expected to reshape their boards by adding independent directors, foreign brokerage representatives, and specialists from capital markets and investment banking. This infusion of varied expertise aims to strengthen corporate governance and protect minority shareholders.
Proponents believe that foreign independent directors will add objectivity, while seasoned bankers and market practitioners will make exchanges more responsive to rapid market developments.
Critics have voiced concerns, arguing that brokers also hold shares in the exchanges they oversee. Yet many business groups have pledged cooperation with regulators to fine‑tune policies that promote a fair, efficient capital market.
Should an exchange exceed the new limits, penalties loom: a fine of one million pesos per director per year, plus a monthly surcharge for continued violations, with repeated offenses potentially leading to suspension or revocation of the exchange’s license.
The circular will become effective fifteen days after its full publication in the Official Gazette or in two major newspapers, marking a decisive step toward revitalized governance in the country’s capital markets.
