SEC tightens rules to protect qualified buyers

The Securities and Exchange Commission (SEC) has imposed stricter rules for registrars of qualified institutional and individual buyers to boost investor protection, reduce transaction risks, and streamline access to the securities market.

Citing its 20 January Memorandum Circular, the regulator said it amended Rule 39.1.4 of the Securities Regulation Code to clarify procedures for registering qualified buyers (QBs), assigning permanent identification numbers, and allowing registrars to use existing QB certifications via a new centralized database.

“The amended guidelines ensure standardized and uniform implementation of the Commission’s rules, making compliance more efficient and accessible for registrars and qualified buyers,” SEC Chairperson Francis Lim said.

“This is in line with our goal of promoting investor protection while still ensuring effective regulatory oversight.”

Under the new rules, banks, brokers, investment houses, funding portals, and other qualified entities may apply to act as registrars, subject to SEC approval.

Registrars must submit detailed internal procedures, maintain ongoing verification of QBs’ eligibility, and issue certificates valid for three years.

A key change is the creation of an Inter-Registrar Registry, an internal SEC database that allows authorized registrars to validate QB details, reducing duplication and risks of errors in securities transactions. Registrars relying on certificates from other registrars are shielded from liability if acting in good faith.

Likewise, the SEC said the guidelines clarify procedures for registrars to cease operations, ensuring continuity and protection for QBs even when a registrar exits the market.