Building a stronger capital market beyond discounts

In June 2025, the Securities and Exchange Commission (SEC) en banc issued Memorandum Circular 6, series of 2025, cutting by 50 percent the fees for IT-related services such as requests for Articles of Incorporation, By-Laws, and Audited Financial Statements. The move was designed to make access to corporate information more affordable and to reduce the financial burden on businesses and the public.

For years, high SEC fees were seen as unnecessary barriers. Lowering them helps small firms and ordinary stakeholders. Yet, it is important to recognize that reducing fees is not the answer to the bigger challenge of developing the capital markets.

The SEC is more than a registrar of corporations. It is also the agency tasked with developing the capital market and protecting investors. The Philippines has the fewest listed corporations in ASEAN and ranks second to the last in market capitalization.

The OECD Capital Market Review of 2024 highlights two key strategies to strengthen the Philippine capital markets: encourage more unlisted corporations to go public and facilitate the listing of government-owned corporations.

Singapore demonstrates the benefits of this approach. Its top three state-owned enterprises (DBS Group Holdings, Singapore Telecommunications, and Singapore Airlines) together account for 27 percent of the country’s total market capitalization. By contrast, the Philippine market remains shallow, with limited depth and participation.

Some initiatives that contribute to the growth of the capital market are the SEC’s “deemed approved” policy, which assures applicants that their complete submissions will be acted upon within a fixed period, and streamlined processes that eliminate piecemeal submissions. These kinds of reforms directly address investor concerns by removing bureaucratic friction and creating certainty, rather than simply lowering fees. These kinds of reform reassure investors that their time and capital will not be wasted waiting indefinitely.

It is worth noting that the fees, whether for registration, amendments, or document requests, are part of the ordinary cost of doing business. Serious investors, both local and foreign, are prepared to shoulder these costs. What deters them is not the amount of the fees, but the perception of weak enforcement, regulatory uncertainty, and a lack of investor protection. In other words, it is not cost but confidence that drives investment.

For the SEC, this means prioritizing its functions on enforcement, monitoring, and investor protection. Swift action against these abuses will reassure investors that the regulator is vigilant. At the same time, the SEC must invest in technology that can detect market manipulation and strengthen corporate governance. A fair and transparent market is far more attractive than one with lower transaction fees.

In the end, discounts reduce cost, but confidence builds markets. If the SEC can demonstrate strong enforcement and credible oversight, more Filipinos will invest, more companies will list, and more foreign investors will view the Philippines as a competitive destination. The fee cut is a good start, but the real challenge is transforming the capital markets into an engine of inclusive economic growth.

(The views and opinions expressed in this article are solely those of the author. This article is for general information and educational purposes, and not offered as, and does not constitute, legal advice or legal opinion.)